Summary: This proposal seeks DAO approval to integrate Yearn Finance’s autocompounding alETH/WETH Velodrome LP vault as a new collateral type within the HAI protocol. This initiative marks the beginning of a broader strategic partnership with Yearn Finance and Alchemix, aimed at enhancing protocol revenue, diversifying HAI collateral, and supporting the long-term stability and scalability of the HAI stablecoin.

Yearn alETH/WETH Vault specs Underlying LP TVL: $3.75M Vault TVL: $1.45M APY: 7.22%

Motivation: HAI’s long-term vision is to become a resilient, scalable, and adoption-driven stablecoin protocol. A key challenge to this vision is ensuring that the collateral base behind HAI is diversified, productive, and aligned with stablecoin growth. Partnering with Yearn allows us to introduce yield-bearing assets (YBAs) as collateral—assets that not only generate revenue for the protocol but also provide users with more capital-efficient opportunities.

Yearn’s autocompounding vaults present a unique opportunity to support this goal while tapping into deep DeFi integrations, especially across the Velodrome ecosystem on Optimism. By onboarding Yearn’s alETH/WETH LP vault, HAI begins a broader campaign to integrate YBA collateral and deepen strategic alignment with top-tier DeFi protocols.

Details:

• The HAI core contributors have collaborated closely with the Yearn team to develop a custom oracle capable of safely and reliably pricing Yearn’s autocompounding Velodrome LP tokens.
• The oracle integration and vault support logic have undergone a comprehensive audit and are ready for production deployment.
• The first Yearn vault being onboarded is the alETH/WETH Velodrome LP vault. This vault auto-compounds trading fees and emissions, increasing the capital efficiency of collateralized positions.
• This integration is the product of a broader relationship with Yearn Finance and Alchemix, both of whom are aligned with HAI’s goal of building a decentralized and sustainable stablecoin ecosystem.

Rationale:

• Protocol Revenue: By using autocompounding LP positions as collateral, the HAI protocol can capture additional fee revenues and potential protocol-owned liquidity mechanisms over time.
• Stablecoin Growth: Yield-bearing collateral provides more attractive leverage opportunities for users, incentivizing the minting of HAI and deepening liquidity across key trading pairs.
• Collateral Diversity: Introducing productive assets as collateral reduces dependency on passive assets and helps counteract a positive redemption rate, improving peg dynamics.
• Strategic Alignments: Yearn and Alchemix are respected DeFi institutions with robust governance and technical infrastructure. Strengthening ties with them enhances HAI’s long-term positioning and integration potential.

Next Steps & Roadmap:

• Activate Yearn’s alETH/WETH autocompounding LP vault as a new collateral type on HAI.
• Monitor and assess performance and utilization.
• Begin research and risk assessment on additional YBA collateral types.
• Develop native leverage looping mechanisms within the HAI protocol to maximize capital efficiency for LP users.
• Explore further integrations with Yearn and Alchemix to co-develop complementary strategies, vaults, and liquidity incentives.

Conclusion: This proposal represents a strategic leap forward for HAI, aligning the protocol with best-in-class DeFi partners and expanding our collateral base in a capital-efficient, revenue-positive direction. By supporting this initiative, the DAO signals its commitment to innovation, resilience, and smart protocol growth.

For: Approve integration of Yearn’s alETH/WETH LP vault as collateral in the HAI protocol. Against: Do not integrate the vault at this time.