NMPIP 196: Restart Enzyme vault & start staking through Kiln (6,624 WETH)

Hi all, @moss @elisafly, @buendiadas @gainzley here, posting from Avantgarde Treasury.

Summary
Over the last few weeks, members have reviewed and discussed a proposal that recommends restarting the Nexus Mutual Enzyme vault & diversifying ETH across staking providers. The non-binding Snapshot signalling vote has gauged positive members’ support for the proposal and it’s now time to move to the following stage of the governance process.

Rationale
The assets on the Nexus Mutual vault on Enzyme have been idle for the last few months. At the same time, the cost of the Proof of Reserve Chainlink Oracle has been a recurring operating expense that is not being offset by any revenues or yields. With this proposal Avantgarde proposes to put those assets back to work and start staking rewards for the Nexus Mutual Capital Pool, while ensuring that a diversified approach minimises the risks for the mutual.

For more detailed information on the potential rewards, fees, monitoring strategy, technical details, and risks, you can refer to the [RFC]: Restart Enzyme vault & diversify ETH across staking providers - continued.

Expenses
Avantgarde proposes a competitive flat annual fee of 0.3% (inclusive of protocol fee) based on total assets under management, while waiving half of the fees during the interim period in which the AUM is partially deployed. This final fee corresponds to around 6% of annual staking rewards at the current APY%.

Specifications
If members support moving this proposal forward, the following course of action will be:

  1. Implement vault settings reconfiguration (see table below from As-Is → 50% allocation)
  2. Allocate WETH (6,624 WETH) to Kiln.

Important notes

  1. The “AS-IS settings” were configured for the previous investment allocation. For more information about that, you can check this post.
  2. No action is required from Nexus Mutual from a technical / engineering effort perspective.
  3. The protocol fee is disabled ad-interim, during the period in which only 50% of the capital is effectively deployed.

Proposal status
This proposal will be on the forum for review and comment from July 5th to July 11th, and it will be put to an on-chain vote on Wed July 12th. Previously, this proposal was posted as an RFC on the forum, after which time it was moved to a non-binding signalling vote.

This NMPIP has been transitioned to an on-chain vote, which is open for voting from Wednesday (12 July) until Saturday (15 July).

Outcome of the vote

After the three-day voting period ended, members unanimously voted to approve an allocation of 6624 WETH from the Nexus Mutual Enzyme vault, which will be staked through Kiln and start generating the mutual additional staked ETH rewards.

After the 24-hour cool-down period passes, the Avantgarde team will update the vault parameters, per their proposal.


Source: Nexus Mutual UI in Governance tab

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Quick update: the Enzyme vault reconfiguration was triggered yesterday and it will take 7 days to be enforced as per our standard cooldown period. You can see the comparative settings pre and post reconfiguration here.

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Final update on the implementation of NMPIP-196:

  • 6,624 ETH staked via Kiln (see screenshot attached or click on the portfolio tab)

  • As we can see from Beaconscan, the activation ETA is for 30th August 2023.

  • Protocol fee reduced to 0.01% instead of 0%. (see screenshot attached or click on the fee tab)
    Here’s the technical reason:
    There is a “fee bps override” that is settable by Council for any given vault (there must be a good reason for it, like this proposal). If “fee bps override” is “empty”, then Enzyme uses the default bps value (i.e. 25 bps). “0” is read as empty. We were never expecting to give any vault 100% fee exemptions, so we never built for that use case. Instead, it can be set to 1 bps (0.01%)

  • As a result of the above, management fee reduced to 0.14% (see screenshot attached or click on the fee tab)

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Final update for this proposal to notify that the 6,624 ETH staked on the Enzyme vault via Kiln have been finally been activated yesterday 30 Aug 2023 as expected. See also Beaconscan.

In name of Avantgarde, thanks again to everyone involved from Nexus Mutual for the pleasant and productive experience. :muscle: :grinning:

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Status update

After the summer implementation of the staking allocation towards Kiln:

  • Visibility of accrued rewards: since accrued rewards live in distinct execution layer and consensus layer contracts per validator, it is too gas-intensive to query balances across all validators on every position value query. So the balance is only visible for the Enzyme vault owner/manager i.e. not for external viewers on the Enzyme UI, until it’s collected.

See the current balance in the attached screenshot.

  • Reward Harvesting & Compounding: mindful of the gas intensive transactions for harvesting and compounding the accrued rewards, our asset management team will define time-based or threshold-based logic, which will be published here for further transparency.

Hope it helps!

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Hi all,

in order to walk through the rationale of the reward harvesting & compounding, our Head of Asset Management @gainzley has prepared a comprehensive video explainer.

We hope this is useful to address the questions from the community around the next steps on this specific strategy. You can check out the video here: https://www.youtube.com/watch?v=FZk3IK5sj-M

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