Thread by @WormholeOracle

yEarn just released a #veCRV vault that completely changes the game for the #Curvefinance ecosystem.

👇In a big ol' tweet thread, here's what I know so far 👇

https://twitter.com/bantg/status/1325483224550809602?s=20

If you don't know the #CRV mechanics, the tldr is $CRV can be time locked to get $veCRV. This entitles the holder to a cut of fees on the platform. It decays over time and you cannot retrieve your $CRV until the lock expires. This also gives the holder voting rights

The other function of veCRV is that when you supply liquidity to Curve, there is a base payment made to you in CRV token. When you have veCRV, you can boost the amount of CRV you earn as an LP.

#yearnfinance submitted a proposal to whitelist its app for use in Curve governance on Aug 24. This gives yEarn the right to lock CRV and participate in Curve governance. They were quickly whitelisted.

gov.curve.fi/t/cip-3-add-sm…

At first, they were using the whitelist to boost their various vault strategies that farm yield on Curve. This was pretty straightforward and expected behavior. However, locking can cause issues for your depositors, so they had to compromise how much CRV they could lock...

...AND how much boost they could earn LPs💸💸💸

Enter: the veCRV "Backscratcher" Vault

There is now a vault that will PERMANENTLY lock you CRV deposits, and in exchange you can earn the fees entitled to veCRV holders + the fees from other vaults that have locked CRV for vote boost. In short, yveCRV pays better than veCRV.

BTW, if you want to check out this vault, it's live at crv.ape.tax

Here's the other big kicker: veCRV CANNOT be traded. If you lock it for a year, you LOCK IT FOR A YEAR. With yveCRV, you can exchange your right to Curve fees at any time you like.

There's even a Uniswap pool already. I don't recommend using it yet as liquidity is very low, but this just goes to show you that the mechanics of veCRV have been ripped wide open

info.uniswap.org/pair/0x2D0C7c3…

In the Curve telegram, people are even considering a yveCRV-CRV Uniswap pair. Could Curve list this pair? Who knows, I have a feeling it would get A LOT of usage, I'll tell you that much.

In the discussions I've had, it seems unclear what happens to the veCRV voting rights with this vault. I believe yEarn gets it, and they have a multisig to make voting decisions. Some people are saying it may be possible to delegate voting to yourself, but we need clarity on that

If yveCRV gets you

1. Higher yield than veCRV
2. The ability to trade into and out of a yveCRV position
3. The ability to keep your voting power

This becomes a no brainer to go with yveCRV. However there is one caveat that honestly scares the shit out of me...

... If you can trade in and out of a veCRV position that gives you voting rights, this fundamentally breaks the purpose of veCRV vote locking, which is meant to align governance with the long term needs of the Curve platform. A self-voting yveCRV breaks Curve governance full stop

We'll see where this goes. It's a Pandora's box that has been opened for the @CurveFinance ecosystem. I'm simultaneously terrified and extremely excited to see where this wild ride brings us next.