The primary objective of the V3 development initiative is to bring about a significant enhancement to V2. The ultimate aim for V3 is to establish a fully decentralized protocol that offers a more secure and dependable framework for managing on-chain capital allocation.
To realize this objective, the Yearn contributors have outlined four crucial prerequisites that V3 must fulfill:
- Initiate decentralization at launch and progressively advance decentralization over time.
- Streamline the process of crafting policies.
- Outperform Yearn's V1 strategy product.
- Surpass the capabilities of Yearn's V2 repository.
The inaugural iteration of Yearn V3, dubbed "3.0," will introduce support for other blockchain networks.
In terms of the fundamental architecture of V3, the budget and strategy components are entirely distinct. The Vault in V3 is compatible with ERC-4626. The relationship between V3 vaults and their strategies has undergone a complete overhaul and is now fully dissociated.
V3 Vaults serve as debt managers that authorize strategies to manage debt, with users covering the associated debt management costs. In this aspect, V3 vaults closely resemble V2 vaults but come with additional enhancements and flexibility.
By adhering to the 4626 standard, the strategy interface gains immediate standardization across multiple protocols in the DeFi ecosystem. This permits any protocol compliant with 4626 to seamlessly integrate with the V3 library, eliminating the need for fresh implementations or policy coding. This simplification significantly reduces the intricacy of budget tracking and also cuts down on gas expenses.
Regarding the fee structure in V3, as the strategies are now independent of the treasury, fees will be applied both at the meta-vault level and through tokenized strategies. V3 introduces a novel "protocol fee" as well. These fees, determined by Yearn's administration, are calculated as a percentage of the cumulative fees collected from any V3 budget or strategy report.
