yvtapir

Yesterday we published a YIP to endorse and fund yTranche. yTranche is a generalized, CLO-inspired tranching framework purpose-built for the next generation of Yearn vaults. Unlike traditional tranching systems, yTranche allows each vault in the system to hold a "target" rate as well as an "excess" buffer. Yield is paid from most senior to junior first hitting each levels "target", then any excess left over once all targets are hit gets split based on the "excess" split. This allows us the ability to turn one underlying yield source into many compelling structured products each with their own features, including fixed rate products. It will be launched with three initial version USD, ETH and BTC Each asset having a "fixed" (senior), a "levered" (mezzanine) and a "equity" (junior). Current launch targets for the fixed senior is 5% USD, 3% ETH and 1.5% BTC. Each senior vault carries the same atomic liquidity as the current Yearn vaults, but with the added benefit of explicit junior capital protecting it. The proposal requests for Yearn to be the anchor depositor in the Levered and Equity tranches, therefore showing we are willing and able to put our own money on the line to back our products and reap the benefits if they outperform. By packaging one underlying vault into different products it allows Yearn to simplify its operations, continue to use the same trusted V3 vault code underneath, take on more risk in the strategies but still serve different groups.

On May 4th an APYX affiliated wallet (0xD17) incorrectly supplied $3m USDC directly to a Morpho market using the Morpho Blue address itself as the onBehalfOf parameter. etherscan.io/tx/0x0059fc47ba… This means the entire deposit was credited to morpho itself and thereby lost and permanently stuck. It appears they realized seven days later and used $3.6m of collateral to borrow back that $3m USDC from the market. To this day the wallet remains both the largest borrower and primary supplier in this apyUSD PT market. Notably, at the current spot prices this position has already become under collateralized, however the oracle used in the market is preventing it from being liquidated. The market uses a "fundamental" oracle that is meant to be the minimum of the APYX system collateral ratio or 1. However, until just the past day the collateral ratio oracle has had not been updated since depoloyment. It does appear the team has begun updating the collateral oracle to reflect the true backing which has begun to lead to liquidations. So far liquidations on this market over the past couple days have been manually done by the APYX team itself with the apxUSD backing and holding the mark to market loss on the balance sheet, since the market cannot clear them profitiably even accounting for the liquidation bonus. Worth noting the APYX has claimed this wallet is not theirs and is not holding backing assets of apxUSD itself. However, shared signer executions, funding practices, overall value amounts and cross wallet transfer matches would suggest otherwise.