SECTION 1: APPLICANT INFORMATION
Applicant Name: Ravageur
Project Name: Yield Yak
Project Description:
Yield Yak build DeFi tools, most known for its DEX aggregator and auto-compounding vaults.
Yak Swap is 100% on-chain and free DEX aggregator. Because Yak Swap is fully on-chain and works via contract calls, it has 100% uptime and there is no proprietary API or server required to use it (so no external points of failure). Any trader can query the best price no matter who or where they are and protocols can even deploy their own Yak Swap router and enjoy on-chain price aggregation.
Yak Vaults & strategies are non-custodial auto-compounding vaults which allow users to benefit from socialised compound returns on their investments. Yak Vaults harness the power of a DEX aggregator (Yak Swap) when auto-compounding to get users the best price on their yield. Yield Yak also offer single-asset leverage strategies which optimise leverage to maximise potential yield from borrowing & lending rate.
Team Members and Roles:
Yak Man, Full-Stack
Simon, Smart Contract
Miha, Smart Contract
Ravageur, BD & Marketing
Harry, Marketing
Eric, Treasury
Angus, Analytics
Project Links:
Website: https://yieldyak.com
Documentation: https://docs.yieldyak.com/
Github: Yield Yak · GitHub
Snapshot:Snapshot
Twitter: https://twitter.com/yieldyak_
Medium: https://yieldyak.medium.com/
Ghost: https://yield-yak.ghost.io/
Telegram: Telegram: Contact @yieldyak
Discord: Yield Yak
Contact Information
Point of Contact: Ravageur [Core Contributor]
Telegram: ravageur77
Twitter: https://twitter.com/ravageur77
Email: yakcontributors@proton.me
Do you acknowledge that your team will be subject to a KYC requirement?:
Yes
SECTION 2a: Team and Product Information
Team Experience
Yield Yak Contributors have been in the blockchain and DeFi space for many years. Notable projects they have either built or been a significant part of include:
Eden is a research and data science group notable for introducing an MEV Protection RPC. It focuses on managing infrastructure for block-building. Additionally, they offer public on-chain datasets and mempool streaming services.
NFTX is a pioneering protocol that wraps similar-value NFTs into fungible ERC20 “vTokens”. This innovative approach not only incentivizes liquid markets for these vTokens but also, as a consequence, creates liquidity for the NFTs themselves.
This platform is a comprehensive resource for tracking liquidity pools and yield farming opportunities across various DeFi platforms.
MetaKafe is a reputation system and is one of the first protocols to utilise Soulbound Tokens (SBTs) based on the ERC-1155 standard.
Experience using Incentives
Incentives have been used at multiple points in the protocols history, mostly funded internally but with a track record of achieving outsized impact on the incentives-spend. Yield Yak has however only ever applied for and received one grant in its history, from GMX & the Avalanche Foundation, outlined below.
1. $300K GMX Rush campaign attracts $17 Million+ in incremental TVL
Yield Yak were the first protocol to build on top of GMX’s GLP when it released its GLP vault on Avalanche back in February 2022. A GMX <> Yield Yak Treasury Swap was executed to further boost the vault esGMX from Yield Yak’s Treasury in December 2022. This was accompanied by a four months long campaign to issue up to $100K in rewards based on hitting key milestone targets of $2.5 million and $5 million TVL.
- Yield Yak’s GLP vault had $1 million TVL at the beginning of the campaign.
- Within 48 hours the $2.5 million milestone was reached
- Within 7 days the $5 million TVL milestone was reached
The campaign was then adapted to add new milestones at $7.5 million and $10 million with additional rewards of up to $300K during the entire period.
Yield Yak’s GLP vault ultimately reached over $18 million TVL at its peak during the Q2 2023 campaign, making it the single largest GLP vault across Avalanche and Arbitrum at the time and capturing 20% of all GLP minted on Avalanche during the period.
Campaign References:
Tweets highlighting campaign impact:
https://x.com/yieldyak_/status/1626679469535645702?s=20
https://x.com/yieldyak_/status/1623372411268698128?s=20
https://x.com/luigidemeo/status/1627684850034520070?s=20
https://x.com/yieldyak_/status/1623372411268698128?s=20
2. Yak Rush #1 featuring Trader Joe attracting $250 million in incremental deposits
This 2021 internally funded program was innovative at the time for its novel mechanics:
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Objective was to incentivise deposits into Yield Yak’s “Banker Joe” lending & borrowing vaults on Avalanche. Yield Yak would loop all assets in the vaults with up to 11x leverage to optimise yield based on borrowing & lending rates.
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Execution strategy was that all performance fees earned by these vaults during program would be airdropped back to users AND matched by Yield Yak’s Treasury at a 1:1 ratio.
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More TVL = more performance fees = more Treasury matching = bigger airdrop creating a positive flywheel effect.
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The campaign was wildly successful, attracting $250 Million in deposits during the period.
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This generated 1,891 AVAX in performance fees, which the Treasury then matched 1:1 and airdropped to users proportional to their time-weighted contributions.
Campaign recap: First Edition of Yak Rush: Recap and 50,000,000 Mini Yak Claim Details | by Yield Yak | Medium
3. Yak Rush #2 featuring Trader Joe attracting 1.3 million JOE conversions
This internally funded program was run in April of 2022 with the purpose of converting Trader Joe’s JOE tokens into a yyJOE derivative. Yield Yak then staked the deposited JOE tokens for veJOE to boost associated Trader Joe pools and yields for users.
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Yield Yak funded150 YAK in incentives for JOE depositors and attracted 1.3M JOE tokens in the process.
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Rewards were front-loaded to incentivise early depositors and slowly decreased as time-passed.
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Full details can be found here: Yield Yak launches Yak Rush for yyJOE alongside veJOE strategies to boost Trader Joe farming yields | by Yield Yak | Medium
Product Overview
Yield Yak aims to offer useful tools to users and operate in a sustainable fashion.
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Yak Swap aggregates all available on-chain liquidity sources on Arbitrum to find users the best price and execute a swap in one-click. Liquidity sources which have been integrated on Arbitrum include: Uniswap, Curve, Trader Joe, Camelot, GMX v1, SushiSwap, WooFi, Ramses, PancakeSwap, Wombat, and Dodo.
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Yak Swap uniquely offers a GLP router, which intelligently mints/redeems GLP for users via the most cost-effective route, taking into account mint/redeem fees, slippage, and gas costs. As far as we know Yak Swap is the only DEX aggregator which makes GLP a swappable asset.
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To date Yak Swap on Arbitrum has swapped $77 million in volume, saving users $1.4M via its multi-hop routes.
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Yield Yak vaults currently have $1.8 million TVL. 42 Active vaults have been deployed on Arbitrum, supporting the following protocols: GMX, DeltaPrime, TraderJoe, Silo, Balancer, Synapse, Wombat, Wombex, Poolside, and BetSwirl.
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100% of YY Arbitrum TVL is organic with no emissions or incentives used to date.
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Yield Yak has been committed to Arbitrum since its launch, deploying its token on the network using LayerZero OFT technology, and moving the majority of its Treasury liquidity from Avalanche to Arbitrum (via Camelot) and paying YAK incentives to YAK-ETH Camelots LPs since inception to ensure deep liquidity is retained.
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100% of protocol fees are distributed in real-time to $YAK stakers natively on Arbitrum. Protocol fees are taken only on yield generated (no deposit/withdrawal fees).
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Zero fees have ever been taken from its DEX aggregator, Yak Swap.
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Partners who integrate Yield Yak vaults are subject to fee-sharing. This was voted on by YAK holders and first implemented with partners DeltaPrime, who receive a percentage of fees generated returned to them in the form of YAK.
What novelty or innovation does your product bring to Arbitrum?
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Yak Swap is a free-to-use public good tool that has never charged any fees and is built completely open-source with no proprietary API. Its GLP router is the only of its kind which makes GLP a swappable asset.
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Yield Yak Vaults serve as a ‘one-stop shop’ for DeFi users searching for yield and serves as a gateway to discover projects in the respective ecosystems.
Is your project composable with other projects on Arbitrum? If so, please explain:
Yes.
Yak Swap (DEX Aggregator): Integrated by DeltaPrime and SteakHut (Concentrated Liquidity Management protocol) protocols to facilitate their in-app swaps. Notably DeltaPrime has integrated Yield Yak’s unique GLP router. Yak Swap itself integrates 11 other protocols on Arbitrum for its routing.
Vaults integrations:
Current DeltaPrime integrations for leveraged strategies.
- GMX GLP
- Wombat USDC.e, USDT, DAI,
Current Savvy DeFi collateral integrations:
- Silo USDC.e
- DeltaPrime USDC
Yield Yak DeltaPrime Savings Accounts Wrappers.
YY have deployed yield-bearing token wrappers for DeltaPrime’s savings accounts vaults, which make them more composable and easier to integrate across the Arbitrum Ecosystem. Yield Yak charges zero fees on these vaults, they simply improve composability of these useful assets across the ecosystem and support DeltaPrime’s growth.
Do you have any comparable protocols within the Arbitrum ecosystem or other blockchains?
DEX aggregators: 1inch, ParaSwap, Odos, OpeanOcean
Vaults: Beefy, Yearn
How do you measure and think about retention internally?
Vaults Retention
There are many ways in which we can think about retention in our case but generally speaking the most important thing is “sticky” TVL. Higher TVL means more rewards flowing into Vaults which means more protocol revenue given fees/revenue are derived from a performance fee (typically 10%) taken only from accruing yield. While new depositors and new deposits are certainly a key metric, TVL is generally seen as our north star.
On the user counts and similar metrics, because the auto compounding part of Yield Yak (main revenue generator) is intended to allow users to be more passive with their DeFi investments, we aren’t as concerned about daily interactions as other protocols may be (users should be able to “sit back and let YY do the work”), so we tend to look at metrics like “number of users with more than $X combined TVL”, and the related churn and reactivation metrics that accompany such a definition of “active” (more on these kinds can be found here: Yield Yak Analytics
That isn’t to say that some daily transactions aren’t important; for instance we monitor the number of reinvests happening per vault per day and have automated alerts which we monitor in case this drops below an existing trend level.
In addition, we track the user data (and other metrics) at a farm level over time too here:
This is so that we can see which vaults are over/under performing in more detail.
Yak Swap Retention
We track the usual metrics such as volume, number of swaps, the unique number of addresses making a swap, as well as metrics related to the savings coming from Yak Swap. More information on these can be found on the dedicated Yak Swap dashboard we have built: Yield Yak Analytics
Do you agree to remove team-controlled wallets from all milestone metrics AND exclude team-controlled wallets from any incentives included in your plan:
Yes
Did you utilise a grants consultant or other third party not named as a grantee to draft this proposal?
No
SECTION 2b: PROTOCOL DETAILS
Is the protocol native to Arbitrum?:
No, Yield Yak was originally deployed on Avalanche in 2021 and was deployed on Arbitrum on December 22, 2022.
Deployer Transaction:
Do you have a native token?:
YAK, which is available on Arbitrum via LayerZero OFT. Liquidity is on Camelot.
Past Incentivization: What liquidity mining/incentive programs, if any, have you previously run?
- $300K GMX Avalanche Rush campaign for GLP
- Yak Rush: Banker Joe Airdrop Campaign
- Yak Rush:150 YAK awarded to JOE → yyJOE conversions
Current Incentivization: How are you currently incentivizing your protocol?
As YAK is fully distributed (airdropped to the community) with no emissions and a fixed 10,000 YAK supply, there are no incentives structures currently in place.
Have you received a grant from the DAO, Foundation, or any Arbitrum ecosystem related program?
No.
Protocol Performance:
Peak Protocol TVL: $755 million, November 30 2021.
Current Protocol TVL: $36.5M
Avalanche TVL: $35M
Arbitrum TVL: $1.8M
Yak Swap Total Volume: $2.9 Billion
User Savings to date (calculated as savings from multi-hop vs single routes): $96 Million.
Protocol Roadmap:
Yield Yak does not release a public roadmap given its need to adapt to the dynamic ecosystems it supports. However items currently being worked on by Contributors:
- New dAPP frontend which significantly improves overall site performance
- Yak Swap v2 (which would add several new features)
- Deploying new vaults
Audit History & Security Vendors:
Our auditors are CoinFabrik: https://coinfabrik.com/
In total 8 audits of various elements of the platform have been performed since inceptions. Two have been publicised:
The others can be shared and made available upon request.
Bug Bounty: Yield Yak funds a bug bounty of 100 YAK for the responsible disclosure of bugs. Several bounties have been paid out over the years for minor disclosures. More info here: Bug Bounty - Yield Yak
Security Incidents:
None
SECTION 3: GRANT INFORMATION
Detail the requested grant size, provide an overview of the budget breakdown, specify the funding and contract addresses, and describe any matching funds if relevant.
Requested Grant Size:
195,000 ARB*
*Milestone driven - this is maximum possible expenditure if all milestones were achieved on very first day.
Grant Breakdown:
Yak Vault Incentives: Up to 180,000 ARB
Yak Swap Gas Refund: Up to 15,000 ARB
Justification of Size:
At present on Arbitrum we have $1.8M in TVL with a weighted APY of ~12% when taking into account pools with >$10k TVL. For context, on Avalanche we have >$35M TVL with a lower weighted APY so feel that a target value of $10M TVL across our Arbitrum pools is realistic and achievable.
To have the best chance of achieving and maintaining this we believe a 17.5% weighted APR from ARB & YAK rewards would be required, which is why we are requesting incentives that would equate to a ~5% APR boost (with an additional 0.5% coming from grant matching). Across the 12 week incentive period this requires the following:
i. USD equivalent = $10M * 17.5% * 12/52 = $402,500.
ii. YAK amount = 50 * $635 = $31,750 assuming YAK at $635.
ii. ARB amount = ($402,500- $31,750) / $2.05 = 180,853 assuming ARB at $2.05.
We have rounded down this number to the 180,000 ARB.
We are also requesting incentives for the use of our free-to-use DEX Aggregator Yak Swap by offering a gas refund to anyone using Yak Swap during the incentive period.
Based on data from 1st January 2024 to 1st March 2024, we have 76.7 swaps per day routed through Yak Swap and the average gas cost for each swap is approx. 7.48e-4 ETH. With these incentives, it seems realistic that Yak Swap usage could triple to approx. 225 swaps per day. In order to fund the refunds over the 12 weeks at this level we would require:
Based on data from 1st January 2024 to 1st March 2024, we have 76.7 swaps per day routed through Yak Swap and the average gas cost for each swap is approx. 7.48e-4 ETH. With these incentives, it seems realistic that Yak Swap usage could double to approx. 150 swaps per day. In order to fund the refunds over the 12 weeks at this level we would require:
i. USD equivalent = 150 * 7 * 12 * 7.48e-4 * $3420 = $38,232 (based on ETH price of $3420)
ii. ARB amount = $38,232 / $2.05 = 18,649 ARB (assuming ARB at $2.05)
We have rounded this number down to 15,000 ARB.
Grant Matching:
50 YAK
Grant Breakdown:
While YAK token is fully distributed with no emissions, Yield Yak’s Treasury commits to adding 50 YAK (approx. $32K USD assuming $YAK at $635) to vault incentives as part of the same program. These will be added proportionally to the ARB vault incentives.
Funding Address:
Team Operations Address: 0x599850287dD42dB3137EF82F70C5dcaBC690d524
Funding Address Characteristics:
3 of 5 multisig with private keys securely stored.
Treasury, Arbitrum : 0xbb82b43Bf2057B804253D5Db8c18A647fC1f3403
Treasury, Avalanche: 0x5925C5c6843A8F67f7Ef2b55Db1f5491573C85Eb
Team Operations Arbitrum: 0x599850287dD42dB3137EF82F70C5dcaBC690d524
Arbitrum Deployer Address: 0xDcEDF06Fd33E1D7b6eb4b309f779a0e9D3172e44
Contract Address: Incentives will be distributed from the Team Operations Address via a decentralised trusted rewards streaming tool, LlamaPay. We have used this mechanism in the past for grants with success.
SECTION 4: GRANT OBJECTIVES, EXECUTION AND MILESTONES
Clearly outline the primary objectives of the program and the Key Performance Indicators (KPIs), execution strategy, and milestones used to measure success. This helps reviewers understand what the program aims to achieve and how progress will be assessed.
Objective:
The primary objective of the program is to onboard Avalanche DeFi users (where our primary user base is) to Arbitrum, thus growing the Arbitrum DeFi ecosystem. Secondarily our objective is to introduce existing Arbitrum users to Yield Yak products to expand our reach in the current ecosystem.
Our objectives and expectations from the campaign are:
- Double Arbitrum Yak Swap volumes
- Achieve TVL of $10 million
Key Performance Indicators (KPIs):
Yak Vaults:
- Total Value Locked
- Net Deposits
- Total Users
- Number of New Users
Yak Swap:
- Swap Volume
- Total Users
- Number of New Users
Execution Strategy:
Yak Swap:
Every two weeks during the 12-week program, gas refunds will be airdropped to users up until the 15,000 ARB limit is reached on a first-come-first-serve basis. Users will not need to manually claim the refunds and Yield Yak will cover gas costs to facilitate the airdrop. If 15,000 ARB in gas is not spent during the period, any remaining ARB will be returned.
Yak Vaults:
We will be using LlamaPay (https://llamapay.io/) to stream rewards from our Team Operations multi-sig. This allows malleability to adjust streaming rates on the fly as milestones are achieved.
- Proposed Milestones and ARB streaming rates ensures that ARB is only spent proportionally to the program being successful.
- Rewards rates will only be changed if TVL is maintained for 48 hours to avoid potential for short-term manipulation
- Rewards will not be streamed to any vaults containing the YAK token
- Priority & criteria for which vaults will receive incentives will be based on their performance against the following criteria:
- Selected pools should already have TVL exceeding $1 million in underlying protocol
- Audited
- Does the pool improve Arbitrum DeFi composability via an integration with other protocols (i.e. DeltaPrime, Gearbox, etc.)
- Is the underlying protocol also providing any matching incentives?
- Does it address a clear use case to deepen liquidity on blue-chip assets?
What mechanisms within the incentive design will you implement to incentivize “stickiness” whether it be users, liquidity or some other targeted metric? [Provide relevant design and implementation details]
Inevitably, there will be some attrition when incentives end. However, our experience and data supports that:
- Partner integrations lead to stickier TVL due to the nature of the creation and unwinding leveraged or collateral positions (and associated costs/fees), thus incentives will prioritise vaults which have partner integrations such as with DeltaPrime, GearBox, and any other Arbitrum protocols using composable yield-bearing YY assets).
- Yield Yak has a history of maintaining sticky TVL, sustaining an average TVL of ~$30 million through the 2022-2023 market downturn, displaying a resilient and loyal user base who want to ‘set and forget’ their yielding assets without need for active management.
How will receiving a grant enable you to foster growth or innovation within the Arbitrum ecosystem?
We believe that Yield Yak’s collaborative approach to DeFi is a net positive to the Arbitrum ecosystem, and this grant allows us to compete and support other DeFi protocols while giving new users an incentive to join a genuine community that has stood the test of time.
Yield Yak has a track record of building innovative, free-to-use tools (GLP Router, Yak Swap, DeltaPrime Account wrappers) and everything it builds reflects the true spirit of DeFi in being 100% on-chain with no proprietary APIs, decentralised, and transparent.
Do you accept the funding of your grant streamed linearly for the duration of your grant proposal, and that the multisig holds the power to halt your stream?
Yes
SECTION 5: Data and Reporting
OpenBlock Labs has developed a comprehensive data and reporting checklist for tracking essential metrics across participating protocols. Teams must adhere to the specifications outlined in the provided link here: Onboarding Checklist from OBL 14. Along with this list, please answer the following:
Is your team prepared to comply with OBL’s data requirements for the entire life of the program and three months following and then handoff to the Arbitrum DAO? Are there any special requests/considerations that should be considered?
Yes
Does your team agree to provide bi-weekly program updates on the Arbitrum Forum thread that reference your OBL dashboard?
Yes, a custom dashboard will be created.
First Offense: *In the event that a project does not provide a bi-weekly update, they will be reminded by an involved party (council, advisor, or program manager). Upon this reminder, the project is given 72 hours to complete the requirement or their funding will be halted.
Second Offense: Discussion with an involved party (advisor, pm, council member) that will lead to understanding if funds should keep flowing or not.
Third Offense: Funding is halted permanently
Does your team agree to provide a final closeout report not later than two weeks from the ending date of your program? This report should include summaries of work completed, final cost structure, whether any funds were returned, and any lessons the grantee feels came out of this grant. Where applicable, be sure to include final estimates of acquisition costs of any users, developers, or assets onboarded to Arbitrum chains. (NOTE: No future grants from this program can be given until a closeout report is provided.)
Yes
Does your team acknowledge that failure to comply with any of the above requests can result in the halting of the program’s funding stream?:
Yes