Yearn Finance absorbs Pickle to boost DeFi rewards

Decentralized finance protocol Yearn has announced a partnership with Pickle Finance to bolster yield farming incentives, and compensate victims of the recent Pickle exploit that resulted in the loss of almost $20 million in Dai.

According to an announcement from Yearn founder Andre Cronje, the move is designed to reduce duplicate work, increase specialization, and leverage shared expertise. Pickle Finance vaults, or ‘Pickle Jars’ as they’re known, are cloned versions of Yearn’s v1 yVaults so the code is similar.

Pickle Finance incentivizes farmers to sell stablecoins that are trading above their peg and buy ones that are below it, to keep them closely aligned with the dollar upon which they’re based.

Cronje said the first step would be to merge Pickle Jars and Yearn’s v2 Vaults and merge both protocol’s total value locked, or TVL. He stated that further integration is planned.

1/ We are pleased to announce that Yearn has formed a symbiotic relationship with @picklefinance.

You can read more information in the Medium & governance posts below. https://t.co/xR8HYp4V58https://t.co/WMG6l2GLdw

— yearn.finance (@iearnfinance) November 24, 2020

The end goal is to bolster returns for yield farmers with Pickle strategies earning increased performance fees under the new Yearn fee structure. Yearn Finance, which recently formalized an operations budget, plans to onboard Pickle developers and strategy creators to design new strategies and fee structures for the new vaults.

Pickle will introduce reward Gauges, with tokens distributed to those who stake Yearn vault tokens. These tokens can now be time locked in escrow and will be called DILL which can also be used to participate in Pickle governance and boost rewards received from Yearn Vault gauges.

Some in the community questioned whether there should have been a governance vote on the decision but Yearn team member ‘@tracheopteryx’ explained this would not be necessary.

He stated that creating new Yearn Vaults, such as the newly merged Pickle Jars, are completely permissionless so no voting is required. Additionally the new Gauges emit Pickle tokens, not Yearn’s, and rewards are in DILL, not YFI.

Pickle Finance was recently hacked in a Dai vault flash loan exploit which resulted in the loss of almost $20 million. Its native token PICKLE collapsed 50% on November 21 from $23 to $11. Following the news of the merger with Yearn, it spiked to almost $30 but has since dumped back to around $16 at the time of press.

A new token called CORNICHON will be created to track losses stemming from this attack. Tokens will be minted against a snapshot of balances at the time of the attack, and distributed to victims proportionally, the announcement added.

Additionally, a claim was recently filed with DeFi insurance protocol Cover to offer as much as $340,000 in compensation if approved by majority vote.