USDC v3 Beta — Update, Instructions & Overview
Incentivized Beta to End June 18, Multi-Strategy Comes to Original USDC Pool
The Vesper team wanted to update its beta users on the USDC pools — both the newer, multi-strategy pool (“v3,” available only on the beta site as of this writing) and the original one (“v1,” available on both the main app and beta app as “USDC Conservative”).
TL;DR: Market conditions will allow the Vesper team to more quickly implement v3’s multi-strategy capability on the original v1 pool (and, in time, all other pools). This eliminates the need for the more gradual user-led migration to the USDC v3 pool. Incentive rewards in the v3 pool remain unchanged, with the beta period ending June 18. The v1 pool will continue to receive rewards as scheduled. Vespernauts deposited in the current v1 pool will see no short-term change, but reap the long-term benefits of the v3 beta test.
What’s Next and What Beta Users Need to Do
Looking at the data, our users most certainly want a way to 1) stay in the current v1 pool and 2) still reap the long-term advantages of v3.
The updates will start at noon today. Here’s what happens next and what you need to do:
- If your USDC is deposited in the v3 beta pool: Just click on the “Update” button to move funds back to the USDC V1 pool. The withdrawal fee will be set to zero for users who move their funds back to the original USDC pool. (Otherwise, users who withdraw from the v3 pool will incur the standard 0.6% withdrawal fee.) Depositors will still get their shares of the 50,000 VSP rewards, with the beta ending June 18.
- If your USDC is deposited in the original v1 pool: You do not need to take action. You won’t see a difference — v1 will stay on the direct-to-Compound strategy for now and be able to utilize v3’s multi-strategy capabilities moving forward.
VSP rewards will continue to refill monthly as scheduled for the USDC v1 pool. The withdrawal fee will go back to 0.6% at noon U.S. Eastern time today and the “Migrate” button will disappear.
All Vesper pools will get this multi-strategy upgrade, though without the unique situation we had with USDC. Again, there is no action or change required of users.
Below is an overview of how and why this migration progressed as it did.
When we first outlined the migration, it was in service of facilitating a steady, user-led movement of deposits from v1 to v3, where multi-strategy was in beta. This was driven in part by the rules behind v1’s yield source, Aave1. Since Vesper was responsible for a majority of the supplied USDC liquidity in Aave v1, a withdrawal that would have allowed seamless movement from v1 to v3 would have exceeded the amount of available liquidity in the market.
This called for a more gradual approach. The team deployed v3 to beta, filled v3 with 50,000 VSP in incentives, zero’ed out the withdrawal fee on USDC v1, and kept an eye on how the balances migrated between the two pools over time.
What happened next? The overall crypto markets took a massive dive. When this selling took place, on-chain loans were repaid en masse across all lending markets.
As a result, the above restrictions on the migration suddenly disappeared since USDC liquidity on Aave1 shot up above the entire sum of Vesper’s deposits. The team took advantage of that opportunity to remove all USDC from Aave1. We then maintained both USDC v1 and v3 in parallel and switched v1 to a direct-to-Compound strategy to maintain APY.
This now means that v1 (and, later, all other Vesper pools) can have all of the long-term multi-strategy benefits we wanted to get out of the v3 beta. This also means that user migration is no longer necessary for people still in the original pool.
Thanks to all Vespernauts who participated in this beta.