S2 Team - Budget Request (Aug-Sept-Oct)

[mil0xeth]

This request continues the work of the first S2 budget request (May-June-July).

Executive Summary

• S2's main objective is to achieve fast and secure V3 strategy development.
• S2 continues the migration of key V2 strategies to V3.
• S2 conducts in-depth due diligence and peer reviews. It is yearn's go-to team for peer reviews.
• S2 builds strategy templates with advanced testing suites for V3 strategies.
• S2 contributes standardized periphery contracts for advanced strategies.
• S2 ensures high standards of development are met before deployment or endorsement of all strategies.
• S2 is the main link between core development and ySecurity, for both internal and external contributors.
• V3 strategies do not reach yearn production without S2.

S2 budget request presentation

Achievements

The S2 team has been highly productive and successful: from porting existing to shipping new strategies, to dozens of thorough peer reviews of strategies and new V3 infrastructure.

Deliverables from prior Budget Request

1. Ensure that single-asset V3 vaults have multiple strategies available at launch.✅

   • Here are some examples of new V3 strategies and V2 migrations S2 is enabling for the launch of V3 across networks:
     • AnyCompoundV2 Lender (status: written, peer reviews implemented)
     • Morpho AaveV2 (status: written, implementing peer reviews)
     • Stargate Staker (status: written, implementing peer reviews)
     • LST (status: written, implementing peer reviews)
     • GenLevCompV2 (status: writing)
   • As a result we have achieved to have at least 3 strategies available per vault at launch.

2. Strategy peer reviews, including existing high TVL strategies, new strategies, and V3 strategies. Strategies are reviewed promptly.✅

   • For all new, updated, and migrated strategies that passed through the review board, S2 provided at least one or usually two peer reviews per strategy. S2 provided in total 25+ reviews, making up the vast majority of all reviews across yearn.
   • All strategies were reviewed in a timely manner. We asked other strategists for their feedback and they were very happy with the speed of peer reviews.

3. Revamp and maintain the project board and retain full ownership of the strategy cards (entire lifecycle).✅

   • Done, see here.

4. Set up and maintain a monitoring system and emergency protocol for each strategy. Each production strategy has a corresponding emergency procedure for immediate war room response.✅

   • The in production view has cards for production strategies with war room information and procedures.

5. Core team members act as signers on all SMS multisigs and commit to review+sign txns in a timely manner.

   • We created a report for all SMS signing activity, showing that S2 is consistently providing fast signing for ySMS and oSMS. We achieved very good averages, but did not manage to have a maximum time of <12 hours that we aimed for in the last budget request.

6. Produce farming reports detailing all protocols with TVL > $10m and any significant changes in the market.

   • We produced a few farming reports (repo / hosted report) useful to identify best yield opportunities for new strategies. The target users of these reports are any strategists at yearn writing new strategies. The plan was to issue these reports monthly, but there was an opportunity cost on creating these reports as no new strategies were being aimed to launch in either V2 or V3 over that time frame. Therefore, we deprioritized this effort to focus on enabling Velodrome and the V3 launch.

A complete summary of the team's efforts and achievements is given in the monthly reports:
May, June, July (prelim)

Plan

With the three-month extension of funding, the S2 team will continue to drive the development pipeline and implementation of yearn strategies. This quarter, our main focus is on building the elements for fast and secure development of V3 strategies. This process consists of improving current strategy templates, enhancing the testing suite with coverage, fuzzing, and invariant testing and automation flows. By establishing such a framework, yearn can strongly increase the confidence we have in any V3 strategies built on these templates.

Our deep understanding of the V3 stack puts us into a unique position to peer review any strategy written inside or outside yearn with excellent knowledge of exploit avenues. Only by preventing exploits can V3 becomes a successful product. We have so far performed the vast majority of all V3 peer reviews and will continue to be the go-to peer review team.

Other objectives that runs parallel to templatization, testing, and peer reviewing are due diligence and monitoring on the underlying protocols, especially those used in multi-strategy vaults. The best strategy testing in the world won't matter if the protocol is upgradeable with a 2/5 multisig, has loose slippage parameters, or adds low-quality collateral on a whim. S2 ensures rigorous standards are met before deploying or endorsing the strategy in production. Armed with this in-depth knowledge of all strategies, S2 can take the lead in war rooms.

In addition, we will continue previous initiatives, such as migration of high-value V2 strategies to V3, and continue to explore new initiatives, like testing Openflow solver on sidechains (potentially allowing async or permissionless harvests).

Potential new source of future revenue: Peer reviews of external V3 strategies

Although the specifics are not ready yet for this budget request, we are in the process of building a framework for an independent strategy and protocol-vetting system. In the future, S2 could act as an unbiased protocol and strategy review team, similar to Llama Risk or Defi Safety. Under such a system:

• S2 would be in charge of vetting and ranking V3 strategies for Yearn's website.
• External developers will pay for the service of S2 peer reviewing their strategies. Only after a completed positive review is the strategy visible for users on the Yearn frontpage, marked clearly as non-Yearn.
• Revenue derived from outside submissions would then be shared according to Yearn's revenue-sharing framework.
• Work during this budget request will help determine the feasibility of such a system in the future.

Deadline

2023-10-31

People

dudesahn
mil0x
0xValJohn
FP
Spalen

Funding

Total per month for 5 contributors: 42'500 DAI + 3.5 YFI

Amount

Total for 3 months: 127'500 DAI + 10.5 YFI

Wallet address

0x00520049162aa47AdA264E2f77DA6749dfaa6218

Reporting

Monthly