Yearn — yvDAI-1

Contract Addresses

Core yvDAI-1 Contracts

Contract	Address	Type
yvDAI-1 Vault	0x028eC7330ff87667b6dfb0D94b954c820195336c	Yearn V3 Vault (v3.0.2), Vyper minimal proxy
Underlying asset (DAI)	0x6B175474E89094C44Da98b954EedeAC495271d0F	MakerDAO DAI
Accountant	0x5A74Cb32D36f2f517DB6f7b0A0591e09b22cDE69	Shared Yearn Accountant (0% mgmt, 10% perf)
Fee Recipient (Dumper)	0x590Dd9399bB53f1085097399C3265C7137c1C4Cf	Claims fees and routes to auctions/splitters

Governance Contracts (shared with all Yearn V3 risk-1 vaults)

Contract	Address	Configuration
Yearn V3 Role Manager	0xb3bd6B2E61753C311EFbCF0111f75D29706D9a41	Single instance for all category-1 vaults
Daddy / ySafe (Governance)	0xFEB4acf3df3cDEA7399794D0869ef76A6EfAff52	6-of-9 Gnosis Safe
Brain (Operations)	0x16388463d60FFE0661Cf7F1f31a7D658aC790ff7	3-of-8 Gnosis Safe
Security	0xe5e2Baf96198c56380dDD5E992D7d1ADa0e989c0	4-of-7 Gnosis Safe
Strategy Manager (Timelock)	0x88Ba032be87d5EF1fbE87336b7090767F367BF73	TimelockController — 7-day delay
Keeper	0x604e586F17cE106B64185A7a0d2c1Da5bAce711E	yHaaSRelayer — REPORTING only
Debt Allocator	0x1e9eB053228B1156831759401dE0E115356b8671	Minimal proxy — REPORTING + DEBT_MANAGER

Yearn V3 Infrastructure

Contract	Address
Vault Factory (v3.0.2)	0x444045c5C13C246e117eD36437303cac8E250aB0
Vault Original (v3.0.2)	0x1ab62413e0cf2eBEb73da7D40C70E7202ae14467

Active Strategies (2 in default queue, 2 with debt)

Default queue order at block 25978217:

#	Strategy	Name	Activation	Current Debt (DAI)	Allocation
1	0xAeDF7d5F3112552E110e5f9D08c9997Adce0b78d	DAI to USDS Depositor	2025-05-15	2,139,048.12	28.84%
2	0xfF03Dce6d95aa7a30B75EFbaFD11384221B9f9B5	DAI To USDC-1 Depositor	2025-10-24	5,276,635.05	71.16%

Last reports: DAI to USDS Depositor 2026-09-13; DAI To USDC-1 Depositor 2026-09-10.

Removed from queue between April 27 and May 5 (no longer in get_default_queue()):

• Savings Dai (sDAI) (0x83F20F44975D03b1b09e64809B757c47f942BEeA) — direct sDAI ERC-4626 wrapper from MakerDAO; previously zero debt
• Spark DAI Lender (0x1fd862499e9b9402DE6c599b6C391f83981180Ab) — direct supply into Spark Lend; previously zero debt
• Aave V3 DAI Lender (0x9BF50e7589a562da2ecC0a87e2597EFBDBde241B) — direct supply into Aave V3; previously zero debt

The rationale for removing all three direct-deposit fallbacks has not been independently verified. Reintroducing any of them would require a fresh addStrategy() proposal at the Strategy Manager TimelockController (7-day delay).

Strategy Protocol Dependencies (effective)

After the vault-of-vaults unwind:

Effective endpoint	Path	Effective share
Sky USDS Staking Rewards (SPK farm)	yvDAI-1 → yvUSDS-1 → Spark USDS Compounder (~28.8%) AND yvDAI-1 → yvUSDC-1 → USDC to USDS Depositor → yvUSDS-1 → Spark USDS Compounder (~8.5%)	~37.3%
Morpho Blue lending (cbBTC + WBTC + wstETH)	yvDAI-1 → yvUSDC-1 → Yearn USDC (Morpho MetaMorpho)	~25.3%
Cap stcUSD (Pawn Broker lending)	yvDAI-1 → yvUSDC-1 → stcUSD/USDC Pawn Broker Market (self-contained, not in default queue)	~21.6%
Sky / sUSDS (Sky Savings Rate)	yvDAI-1 → yvUSDC-1 → USDC to sUSDS Lender	~15.8%
MakerDAO PSM Lite (USDC ↔ DAI)	Used by DAI To USDC-1 Depositor for inbound DAI → USDC conversion (and reverse on withdrawal)	High during routing
Sky DAI-USDS Exchanger (DAI ↔ USDS)	Used by DAI to USDS Depositor and USDC to USDS Depositor for inbound conversions (and reverse on withdrawal)	High during routing
yvUSDC-1 (intermediate vault)	71.16% of yvDAI-1 routes through it	Vault-of-vaults dependency
yvUSDS-1 (intermediate vault)	28.84% directly + ~8.5% via yvUSDC-1's USDC to USDS Depositor	Vault-of-vaults dependency

Net Sky-ecosystem concentration: ~53.1% of deployed DAI (USDS Staking ~37.3% + sUSDS ~15.8%), down from ~93.9% at July 12. The remaining ~46.9% splits between Morpho Blue (~25.3%, via the Yearn USDC MetaMorpho vault) and Cap stcUSD (~21.6%, via the self-contained stcUSD/USDC Pawn Broker Market that lends USDC against stcUSD collateral). The Pawn Broker strategy is not in yvUSDC-1's default withdrawal queue — see the yvUSDC-1 report for that vault's queue detail.

Audits and Due Diligence Disclosures

Yearn V3 Core Audits

Auditor	Date	Scope	Report
Statemind	May 2, 2024	V3 Vaults (v3.0.0)	PDF
ChainSecurity	May 4, 2024	V3 Vaults + Tokenized Strategy (v3.0.0)	2 PDFs
yAcademy	Jun 2024	V3 Vaults (v3.0.1)	PDF

Sky / MakerDAO Audits (Underlying Protocol)

Sky (formerly MakerDAO) is one of the most extensively audited DeFi protocols:

Auditor	Coverage	Notes
ChainSecurity	9 audits including USDS, sUSDS, PSM Lite	Core security partner
Cantina	10 audit reports including sUSDS and USDS	Comprehensive coverage
Sherlock	Public audit contest (Aug 2024)	Community audit
Trail of Bits	Core DAI system (legacy MCD)	Historical audit
PeckShield	Core DAI system (legacy MCD)	Historical audit
Quantstamp	Liquidations 2.0	Historical audit
ABDK	Vote Delegate security	Governance audit

LitePSM (used for USDC ↔ DAI conversion): audited by ChainSecurity and Cantina.

DAI-USDS Exchanger: part of the Sky Endgame stack, audited under the same umbrella.

Strategy Review Process

All strategies pass through Yearn's 12-metric risk-scoring framework (RISK_FRAMEWORK.md). yvDAI-1 is registered as Category 1 in the Role Manager (getCategory(vault) == 1), the strictest tier.

Bug Bounty

• Yearn (Immunefi): active, $200,000 max payout (Critical). https://immunefi.com/bounty/yearnfinance/
• Yearn (Sherlock): also listed at https://audits.sherlock.xyz/bug-bounties/30
• Sky / MakerDAO (Immunefi): active, $10,000,000 max payout (Critical). Scope includes DAI, USDS, sUSDS, PSM. https://immunefi.com/bug-bounty/sky/
• Morpho (Cantina): active, $2,500,000 max payout (Critical). https://cantina.xyz/bounties/35a5f0a1-2ffd-432c-8f3b-77d169add8c3
• Cap (Sherlock): active, $1,000,000 max payout (Critical only). See Cap stcUSD report
• Safe Harbor (SEAL): Yearn is not listed on the SEAL Safe Harbor registry

On-Chain Complexity

The yvDAI-1 system is moderately complex because of the vault-of-vaults composition:

• 2 funded strategies, both depositors into other Yearn V3 vaults
• Conversion hops:
  • DAI To USDC-1 Depositor: DAI → USDC (PSM Lite) → yvUSDC-1 → (22.2%) USDC into sUSDS Lender / (35.6%) USDC into Yearn USDC MetaMorpho / (30.3%) USDC into stcUSD/USDC Pawn Broker Market / (11.9%) USDC into USDC to USDS Depositor → yvUSDS-1
  • DAI to USDS Depositor: DAI → USDS (Exchanger) → yvUSDS-1 → (100%) USDS into Spark USDS Compounder → Sky USDS Staking Rewards
• Two layers of Yearn V3 vault accounting to verify (yvDAI-1 → yvUSDC-1 or yvDAI-1 → yvUSDS-1). Neither intermediate vault chains through the other
• No leverage, no looping, no cross-chain bridging
• Standard ERC-4626 at every layer
• Vault is immutable (non-upgradeable Vyper minimal proxy)

The vault-of-vaults composition is not leverage but is a real complexity surface — a bug or accounting issue at any layer cascades. Each layer is itself ERC-4626 and on-chain verifiable.

Historical Track Record

• Vault deployed: March 12, 2024 (deployment tx) — ~30 months in production
• TVL: 7,442,095.60 DAI — well within the 50M DAI deposit limit (current remainder ~42.56M DAI via maxDeposit)
• PPS trend: 1.000000 → 1.130024 (~13.00% cumulative return over ~30 months, ~5.0% annualized)
• Security incidents: None known for this vault or for the Yearn V3 framework
• Strategy changes: active management. Between April 27 and May 5, three direct-deposit fallbacks (sDAI, Spark DAI Lender, Aave V3 DAI Lender) were removed from the default queue (and remain absent at September 14). The depositor allocation drifted from 73.19 / 26.81 (USDC / USDS) at July 12 to 71.16 / 28.84 at September 14
• Vault-of-vaults rewiring (downstream):
  • Between July 12 and September 14, both intermediate vaults materially rewired again. yvUSDC-1 now deploys ~22.2% via USDC to sUSDS Lender, ~35.6% via Yearn USDC (Morpho MetaMorpho), ~30.3% via the self-contained stcUSD/USDC Pawn Broker Market (0xe63a2abc24cd9538398d825a4bfe5778d25687df, v3.0.4, not in default queue), and ~11.9% via USDC to USDS Depositor (newly funded). yvUSDS-1 has fully drained its sUSDS Lender and now routes 100% through Spark USDS Compounder into Sky USDS Staking Rewards, reversing the prior ~84/16 sUSDS / Spark split
  • Net effect at September 14: effective endpoint mix is ~37.3% Sky USDS Staking / ~25.3% Morpho Blue lending (via Yearn USDC MetaMorpho) / ~21.6% Cap stcUSD (Pawn Broker) / ~15.8% sUSDS. Sky-ecosystem concentration fell from ~93.9% to ~53.1%, with the first third-party collateral-governance dependency (Cap) entering yvDAI-1's effective exposure via the Pawn Broker leg
• Yearn V3 track record: V3 framework has been live since May 2024 (~28 months). No V3 vault exploits

Yearn protocol TVL: ~$188.27M total across all chains (DeFiLlama, September 14, 2026).

Sky / sUSDS / USDS Staking track record: see the yvUSDS-1 report for the underlying-protocol details — yvDAI-1 inherits the same dependency profile via the depositor strategies.

Funds Management

yvDAI-1 deploys ~99.65% of its DAI via two depositor strategies (the remainder is idle). The deployed DAI terminates across three ecosystems: Sky (~53.1%, split between USDS Staking and sUSDS), Morpho Blue (~25.3%, via the Yearn USDC MetaMorpho), and Cap (~21.6%, via the stcUSD/USDC Pawn Broker Market).

Strategy 1: DAI To USDC-1 Depositor (71.16% allocation)

Contract: 0xfF03Dce6d95aa7a30B75EFbaFD11384221B9f9B5 — verified vault target 0xBe53A109B494E5c9f97b9Cd39Fe969BE68BF6204 (yvUSDC-1).

Pipeline:

1. DAI → USDC via MakerDAO PSM Lite (0xf6e72Db5454dd049d0788e411b06CfAF16853042) — 1:1 at 0% fee (tin = tout = 0)
2. USDC → yvUSDC-1 deposit (ERC-4626)
3. yvUSDC-1 internally routes ~22.2% to USDC to sUSDS Lender (0x7130570BCEfCedBe9d15B5b11A33006156460f8f) → sUSDS; ~35.6% to Yearn USDC (0x68Aea7b82Df6CcdF76235D46445Ed83f85F845A3) — a Yearn-curated Morpho MetaMorpho vault supplying USDC into four Morpho Blue markets (cbBTC, WBTC, wstETH collateral; LLTV 86%; AdaptiveCurveIRM); ~30.3% to the self-contained stcUSD/USDC Pawn Broker Market (0xe63a2abc24cd9538398d825a4bfe5778d25687df, v3.0.4) which lends USDC against stcUSD collateral (not in default queue); and ~11.9% to USDC to USDS Depositor (0x39c0aEc5738ED939876245224aFc7E09C8480a52) into yvUSDS-1. The Spark USDC Lender (0x654a7c4Ae5ac3C853a99F8dbEAD2bC85090F753a) holds 0 debt; the old one at 0x25f893276544d86a82b1ce407182836F45cb6673 is revoked

Withdrawal: reverse path. The user's redeem on yvDAI-1 triggers withdraw from this strategy → redeem from yvUSDC-1 → withdraw from yvUSDC-1's downstream (queue order: USDC to USDS Depositor, sUSDS Lender, Yearn USDC MetaMorpho → Morpho Blue, Spark USDC Lender; the Pawn Broker is outside the default queue) → unwind into USDC → DAI via PSM. All atomic in the same transaction.

Strategy parameters:

• Activated: 2025-10-24
• Last reported: 2026-09-10 (last_report = 1789016927)
• PSM fee fallback: 0.05% threshold (above which the strategy can be configured to use Uniswap V3 with 0.5% slippage tolerance)

Strategy 2: DAI to USDS Depositor (28.84% allocation)

Contract: 0xAeDF7d5F3112552E110e5f9D08c9997Adce0b78d — verified vault target 0x182863131F9a4630fF9E27830d945B1413e347E8 (yvUSDS-1).

Pipeline:

1. DAI → USDS via Sky DAI-USDS Exchanger (0x3225737a9Bbb6473CB4a45b7244ACa2BeFdB276A) — 1:1, no fee
2. USDS → yvUSDS-1 deposit (ERC-4626)
3. yvUSDS-1 currently routes 100% to its Spark USDS Compounder strategy (0xc9f01b5c6048B064E6d925d1c2d7206d4fEeF8a3) → Sky USDS Staking Rewards (SPK farm). Its sUSDS Lender (0x3F2dE801629116A83B9734bB72012A554e01CfC1) has been fully drained to 0 debt, and the queued USDS Sky Rewards Compounder (0x0868076663Bbc6638ceDd27704cc8F0Fa53d5b81, v3.0.3) remains at 0 debt

Withdrawal: reverse path. The user's redeem on yvDAI-1 triggers withdraw from this strategy → redeem from yvUSDS-1 → unwind from the Spark USDS Compounder (Sky USDS Staking Rewards). All atomic in the same transaction.

Strategy parameters:

• Activated: 2025-05-15
• Last reported: 2026-09-13 (last_report = 1789269347)

Removed from default queue (between April 27 and May 5)

• Savings Dai (sDAI) (0x83F20F44975D03b1b09e64809B757c47f942BEeA) — direct ERC-4626 wrapper from MakerDAO; previously zero debt
• Spark DAI Lender (0x1fd862499e9b9402DE6c599b6C391f83981180Ab) — direct supply into Spark Lend; previously zero debt
• Aave V3 DAI Lender (0x9BF50e7589a562da2ecC0a87e2597EFBDBde241B) — direct supply into Aave V3; previously zero debt

The removal of all three direct-deposit fallbacks eliminates the on-chain single-hop alternatives that were available at the prior snapshot. Reintroducing any of them now requires a fresh addStrategy() proposal at the Strategy Manager TimelockController (7-day delay). Rationale for the removals has not been independently verified.

Accessibility

• Deposits: Permissionless ERC-4626. Subject to 50M DAI deposit limit
• Withdrawals: ERC-4626. Atomic, but unwinds through up to three vault layers + Sky / Spark / Morpho / Pawn Broker exits
• No cooldown or lock period
• Fees: 0% management, 10% performance
• Profit unlock: 10 days

Collateralization

• 100% on-chain DAI backing. All deposits are DAI; deployed DAI terminates across Sky (USDS Staking + sUSDS), Morpho Blue, and the Cap stcUSD Pawn Broker, but the unwind always returns DAI 1:1
• Collateral quality: the Sky legs are backed by Sky's over-collateralized loan book + RWA Treasury bills; the Morpho Blue leg is over-collateralized isolated lending against cbBTC / WBTC / wstETH; the Pawn Broker leg lends USDC against stcUSD (Cap) collateral — a newer protocol (3-of-5 anonymous multisig, upgradeable UUPS proxies, 8 audits, score 2.4/5.0). See Cap stcUSD report
• No leverage at the yvDAI-1 layer — the vault-of-vaults composition is not leverage. (The Pawn Broker itself is a lending market; a levered borrower loop exists in a different vault, yvUSD — see yvUSD report)
• All positions are redeemable via the reverse pipeline, but the Pawn Broker strategy (~21.6% effective) is not in yvUSDC-1's default withdrawal queue and requires targeted withdrawal or queue addition

Provability

• PPS: ERC-4626, fully algorithmic
• Strategy totalAssets(): reads the underlying yvUSDC-1 / yvUSDS-1 share balance and converts via ERC-4626 convertToAssets() — fully on-chain, real-time
• Multi-layer verification: anyone can independently verify yvDAI-1 → yvUSDC-1 → (sUSDS Lender / Yearn USDC MetaMorpho → Morpho Blue / stcUSD Pawn Broker) and yvDAI-1 → yvUSDS-1 → Spark USDS Compounder on-chain. Each layer's exchange rate is its own ERC-4626 calculation
• Profit / loss reporting: keepers via process_report(), profits unlock over 10 days

The vault-of-vaults adds a small surface area to verify (multiple totalAssets() reads) but does not add any off-chain dependency.

Liquidity Risk

• Primary exit: Redeem yvDAI-1 for DAI via ERC-4626 withdraw() / redeem(). Triggers reverse pipeline through yvUSDC-1 / yvUSDS-1 (atomic, multi-step in the same transaction)
• Highly liquid underlying: Sky USDS Staking has multi-billion USDS staked; sUSDS holds multi-billion TVL; Morpho Blue markets for cbBTC, WBTC, and wstETH are deep and liquid. yvDAI-1's ~$7.44M is a tiny fraction of underlying capacity
• PSM liquidity: MakerDAO PSM Lite provides deep DAI ↔ USDC liquidity at 1:1, 0% fee. PSM capacity is managed by Sky governance and typically holds billions of USDC
• Cascading withdrawal mechanics: both depositor paths traverse two Yearn V3 vault layers (yvDAI-1 → yvUSDC-1 or yvDAI-1 → yvUSDS-1) plus the terminal exit (Spark Compounder unwind, sUSDS withdrawal, Morpho Blue redemption, or Pawn Broker loan recall). The Yearn USDC path adds an additional MetaMorpho layer (bounded). Neither intermediate vault chains through the other. All steps execute atomically in the same transaction
• Pawn Broker queue gap: the stcUSD/USDC Pawn Broker Market (~30.3% of yvUSDC-1, ~21.6% of yvDAI-1 effective deployment) is not in yvUSDC-1's default withdrawal queue. A standard redemption draws on yvUSDC-1's queued strategies first; the Pawn Broker position requires targeted withdrawal or queue addition, and its idle USDC is small (~$8.9K), so it is less liquid under heavy redemptions
• No DEX liquidity needed — exit is via Sky's own contracts (PSM, Exchanger, sUSDS, USDS Staking), Morpho Blue redemption, and the Pawn Broker's own lending book
• Same-value asset: DAI-denominated vault token — no price-divergence risk
• No withdrawal queue or cooldown — atomic redemption
• Deposit limit: 50M DAI cap vs ~$7.44M TVL (room for +572%)

The cascading multi-layer withdrawal is atomic but has a higher gas cost than a single-strategy vault. For a large institutional withdrawal, the gas of unwinding through both layers plus the terminal Sky / Spark / Morpho / Pawn Broker exits should be considered when sizing the redemption. The Pawn Broker being outside yvUSDC-1's default queue is the main liquidity nuance — but it is a tail risk under vault-wide redemption stress, not a blocker for ordinary exits.

Centralization & Control Risks

Governance

Position	Address	Threshold	Roles on Vault
Daddy (ySafe)	0xFEB4acf3df3cDEA7399794D0869ef76A6EfAff52	6-of-9	12 of 14 vault roles
Brain	0x16388463d60FFE0661Cf7F1f31a7D658aC790ff7	3-of-8	QUEUE, REPORTING, DEBT, MAX_DEBT, DEPOSIT_LIMIT, WITHDRAW_LIMIT, PROFIT_UNLOCK, DEBT_PURCHASER, EMERGENCY
Security	0xe5e2Baf96198c56380dDD5E992D7d1ADa0e989c0	4-of-7	DEBT, MAX_DEBT, EMERGENCY
Strategy Manager (Timelock)	0x88Ba032be87d5EF1fbE87336b7090767F367BF73	7-day delay	ADD_STRATEGY, REVOKE_STRATEGY, FORCE_REVOKE, ACCOUNTANT, MAX_DEBT
Keeper	0x604e586F17cE106B64185A7a0d2c1Da5bAce711E	Bot	REPORTING only
Debt Allocator	0x1e9eB053228B1156831759401dE0E115356b8671	Bot	REPORTING + DEBT_MANAGER

ySafe 6-of-9 signers include publicly known DeFi contributors — see Yearn Multisig Info.

Properties:

1. No EOA holds vault roles directly
2. Strategy additions and accountant changes pass through 7-day timelock
3. Self-governed timelock — TIMELOCK_ADMIN belongs to the timelock itself
4. Vault contract is immutable — Vyper minimal proxy
5. Same governance pattern across 37+ vaults

Programmability

• PPS: ERC-4626, fully algorithmic at every vault layer
• Vault operations: permissionless deposit / withdraw on-chain
• Strategy reporting: automated via keeper at every vault layer
• Debt allocation: Debt Allocator (automated) + Brain (manual) at every vault layer
• Off-chain inputs: none

External Dependencies

After resolving the vault-of-vaults composition, yvDAI-1's effective dependencies are:

Dependency	Criticality	Notes
yvUSDC-1 (intermediate vault)	Critical — 71.16% of deployed funds route through it	Same governance, audits, code as yvDAI-1. See yvUSDC-1 report
yvUSDS-1 (intermediate vault)	Critical — 28.84% direct + ~8.5% via yvUSDC-1	Same governance, audits, code. See yvUSDS-1 report
Sky USDS Staking Rewards (SPK farm)	Critical — ~37.3% of effective deployment (via yvUSDS-1 and yvUSDC-1's USDC to USDS Depositor)	First-party Sky contract; now the dominant Sky leg after yvUSDS-1 drained its sUSDS Lender
Morpho Blue (via Yearn USDC MetaMorpho)	High — ~25.3% of effective deployment (via yvUSDC-1)	Yearn-curated Morpho MetaMorpho vault supplying USDC into Morpho Blue (cbBTC, WBTC, wstETH collateral; LLTV 86%; AdaptiveCurveIRM). Same Yearn governance (ySafe guardian, Security fee recipient, 3-day timelock). Morpho Blue audited by Cantina, Spearbit, ChainSecurity
Cap stcUSD (Pawn Broker)	High — ~21.6% of effective deployment (via yvUSDC-1)	Self-contained Yearn V3 TokenizedStrategy (v3.0.4) lending USDC against stcUSD collateral, not in yvUSDC-1's default withdrawal queue. Cap: 3-of-5 anonymous multisig → 24h timelock, upgradeable UUPS proxies, 8 audits, ~13 months in production. See Cap stcUSD report (2.4/5.0)
Sky / sUSDS (Sky Savings Rate)	Moderate — ~15.8% of effective deployment (via yvUSDC-1)	Multi-billion sUSDS TVL, $10M Immunefi bounty
MakerDAO PSM Lite	High during routing (used by yvUSDC-1 path)	1:1, 0% fee, audited
Sky DAI-USDS Exchanger	High during routing (used by yvUSDS-1 path)	1:1, no fee, audited
DAI / USDS / USDC tokens	Critical	Inherited from each conversion hop

Dependency quality: Sky / MakerDAO infrastructure and Morpho Blue are top-tier (Sky: $10M Immunefi bounty, multi-billion sUSDS/USDS Staking TVL; Morpho Blue: audited by Cantina, Spearbit, ChainSecurity). Cap (stcUSD) is younger and has weaker governance (3-of-5 anonymous multisig, upgradeable UUPS proxies, 8 audits, ~13 months in production, score 2.4/5.0). Effective deployment is now spread across three ecosystems — Sky ~53.1%, Morpho Blue ~25.3%, Cap ~21.6% — materially more diversified than the ~93.9% Sky concentration at July 12, but with a new third-party collateral-governance dependency (Cap) via the Pawn Broker leg. The vault-of-vaults still concentrates dependency on Yearn V3's own vault accounting working correctly across two vault layers.

Operational Risk

• Team: Yearn Finance — established 2020, public contributors, named multisig signers
• Vault management: Standard Yearn V3 Role Manager pattern shared across 37+ vaults
• Documentation: Comprehensive Yearn V3 documentation. All strategy code verified on Etherscan
• Legal: Yearn BORG via YIP-87
• Incident response: 4 historical V1 events handled. V3 framework not yet stress-tested by an exploit
• V3 immutability: vault cannot be upgraded — eliminates proxy upgrade risk but means a critical bug requires deploying a new vault
• Vault-of-vaults operational consideration: because yvDAI-1's funded strategies all depend on yvUSDC-1 / yvUSDS-1 being healthy, an emergency action on either upstream vault (e.g. shutdown, deposit pause) directly impacts yvDAI-1

Monitoring

Existing Monitoring Infrastructure

Yearn maintains the monitoring repository with active alerting. yvDAI-1 is in the monitored vault list:

• Large flow alerts (protocols/yearn/alert_large_flows.py) — runs hourly via the automation scheduler
• Endorsed vault check (protocols/yearn/check_endorsed.py) — daily
• Timelock monitoring (protocols/timelock/timelock_alerts.py)

Key Contracts

Contract	Address	Monitor
yvDAI-1 Vault	0x028eC7330ff87667b6dfb0D94b954c820195336c	PPS, totalAssets(), totalDebt(), totalIdle(), Deposit / Withdraw events
DAI to USDC-1 Depositor	0xfF03Dce6d95aa7a30B75EFbaFD11384221B9f9B5	totalAssets(), isShutdown(), keeper report
DAI to USDS Depositor	0xAeDF7d5F3112552E110e5f9D08c9997Adce0b78d	totalAssets(), isShutdown(), keeper report
yvUSDC-1 (upstream dependency)	0xBe53A109B494E5c9f97b9Cd39Fe969BE68BF6204	PPS, shutdown state, strategy queue
yvUSDS-1 (upstream dependency)	0x182863131F9a4630fF9E27830d945B1413e347E8	PPS, shutdown state, strategy queue
Yearn USDC (Morpho MetaMorpho)	0x68Aea7b82Df6CcdF76235D46445Ed83f85F845A3	totalAssets(), totalSupply(), supplyQueue(), Morpho Blue market utilization rates
stcUSD/USDC Pawn Broker Market	0xe63a2abc24cd9538398d825a4bfe5778d25687df	totalAssets(), totalIdle(), stcUSD balanceOf(address), queue membership (not in default queue) — self-contained Yearn V3 v3.0.4 lending strategy
stcUSD (Cap) Vault	0x88887bE419578051FF9F4eb6C858A951921D8888	PPS (convertToAssets(1e18)), ERC-1967 implementation slot (upgradeable UUPS proxy) — collateral asset in the Pawn Broker
USDS Sky Rewards Compounder	0x0868076663Bbc6638ceDd27704cc8F0Fa53d5b81	totalAssets(), debt (currently 0) — successor to Spark USDS Compounder
MakerDAO PSM Lite	0xf6e72Db5454dd049d0788e411b06CfAF16853042	tin, tout (fee parameters)
Sky DAI-USDS Exchanger	0x3225737a9Bbb6473CB4a45b7244ACa2BeFdB276A	dai() / usds() mapping integrity; no on-chain live() getter — pause is via upstream Sky governance (cage)
ySafe (Daddy)	0xFEB4acf3df3cDEA7399794D0869ef76A6EfAff52	Signer / threshold changes

Critical Events to Monitor

• PPS decrease at any of the three vaults in scope (yvDAI-1, yvUSDC-1, yvUSDS-1) — should only increase outside of explicit loss events
• Strategy additions / removals at any layer
• Emergency actions (Shutdown) at any layer — directly impacts yvDAI-1's redemption path
• PSM tin / tout — if non-zero, USDC ↔ DAI conversion incurs fees
• DAI-USDS Exchanger pause state
• Sky USDS Staking Rewards pause / migration (affects ~37.3% of effective deployment via yvUSDS-1 and yvUSDC-1's USDC to USDS Depositor — dominant Sky exposure)
• Sky sUSDS pause / migration (affects ~15.8% of effective deployment via yvUSDC-1)
• Yearn USDC MetaMorpho: guardian or curator changes, market removal, or exploit (affects ~25.3% of effective deployment via yvUSDC-1)
• stcUSD/USDC Pawn Broker Market: queue membership change, stcUSD collateral drawdown, or Cap (stcUSD) depeg/upgrade (affects ~21.6% of effective deployment via yvUSDC-1)
• ySafe / Brain / Security signer or threshold changes

Monitoring Functions

Function	Contract	Purpose	Frequency
convertToAssets(1e18)	yvDAI-1	PPS	Every 6 hours
convertToAssets(1e6)	yvUSDC-1	Upstream PPS	Every 6 hours
convertToAssets(1e18)	yvUSDS-1	Terminal PPS	Every 6 hours
totalAssets()	All three vaults	TVL	Daily
tin() / tout()	PSM Lite	PSM fee	Daily
dai() / usds()	DAI-USDS Exchanger	Token mapping integrity (no on-chain live() getter; pause via upstream Sky cage)	Daily
getThreshold() / getOwners()	ySafe	Governance integrity	Weekly
getMinDelay()	TimelockController	Delay change detection (7-day)	Weekly

Reassessment Triggers

• Time-based: Reassess in 6 months (March 2027) or annually
• TVL-based: Reassess if TVL exceeds $25M or changes by ±50%, or if the deposit limit is changed
• Strategy posture:
  • any new addStrategy() proposal at the Strategy Manager TimelockController for yvDAI-1 (would surface in the 7-day queue) — particularly if it reintroduces direct sDAI / Spark DAI Lender / Aave V3 DAI Lender exposure
  • the depositor allocation between yvUSDC-1 and yvUSDS-1 swings by more than ±20 percentage points from the current 71.16 / 28.84 split
• Downstream rewiring (the dominant change vector at recent snapshots):
  • if yvUSDC-1 reroutes materially away from its current four-strategy mix (USDC to sUSDS Lender ~22.2%, Yearn USDC ~35.6%, stcUSD/USDC Pawn Broker Market ~30.3%, USDC to USDS Depositor ~11.9%), yvDAI-1's effective endpoint mix changes accordingly
  • if yvUSDS-1 rewires away from its current 100% Spark USDS Compounder routing, yvDAI-1's ~37.3% USDS Staking share changes accordingly
  • Yearn USDC MetaMorpho: reassess if the strategy's Morpho Blue market allocations change materially, if markets are added/removed from the supply queue, or if the guardian/curator changes. Current allocation: cbBTC ~64.7% / WBTC ~28.6% / wstETH ~6.5% / cbBTC (second market) <0.1% of ~$7.31M TVL
  • stcUSD/USDC Pawn Broker Market: reassess if the strategy (0xe63a2abc24cd9538398d825a4bfe5778d25687df, v3.0.4) is added to or removed from yvUSDC-1's default queue, if its debt share exceeds ~35% of yvUSDC-1, or if Cap (stcUSD) governance/contracts change materially
  • USDS Sky Rewards Compounder: reassess if the USDS Sky Rewards Compounder (0x0868076663Bbc6638ceDd27704cc8F0Fa53d5b81, v3.0.3) replaces the existing Spark USDS Compounder in the yvUSDS-1 default queue and begins receiving meaningful debt
• Vault-of-vaults composition:
  • reassess if a new strategy is added that creates a third Yearn-vault layer (the cascade is currently 2 layers deep)
  • reassess if any of the two intermediate vaults (yvUSDC-1, yvUSDS-1) shuts down a strategy that holds yvDAI-1's deployed funds
• Sky-specific:
  • SSR drops below 2% (may indicate Sky-side stress)
  • PSM tin / tout set above 0.05% (activates Uniswap V3 fallback in the USDC depositor path)
  • SPK reward rate changes materially or USDS Staking Rewards is paused / migrated
  • DAI-USDS Exchanger pause (via upstream Sky cage; the Exchanger contract itself has no live() getter)
• Cap-specific: stcUSD depeg, Cap multisig/threshold change, stcUSD implementation upgrade, or a change to the Cap stcUSD report score (currently 2.4/5.0)
• Incident-based: any V3 exploit, strategy loss, governance compromise, or major incident at Sky / MakerDAO / Spark / Morpho / Cap
• Governance-based: ySafe / Brain / Security signer or threshold changes; any change to the timelock delay (would itself require 7 days)

---

Appendix: Contract Architecture

┌─────────────────────────────────────────────────────────────────────────┐
│                          VAULT LAYER 1                                   │
│                                                                          │
│  ┌────────────────────────┐                                             │
│  │  yvDAI-1 (v3.0.2)      │                                             │
│  │  ERC-4626, immutable    │                                             │
│  │  0x028e…336c            │                                             │
│  │                         │                                             │
│  │  ~$7.44M DAI TVL        │                                             │
│  └───┬───────────────┬─────┘                                             │
│      │ 71.16%        │ 28.84%                                            │
│      ▼               ▼                                                    │
│  ┌────────────┐  ┌─────────────────┐                                    │
│  │ DAI→USDC-1 │  │ DAI→USDS        │                                    │
│  │ Depositor  │  │ Depositor       │                                    │
│  │ 0xfF03…f9B5│  │ 0xAeDF…b78d     │                                    │
│  └────┬───────┘  └────────┬────────┘                                    │
│       │                   │                                              │
│  ┌────▼─────────┐    ┌────▼──────────────────┐                          │
│  │ DAI→USDC     │    │ DAI→USDS              │                          │
│  │ via PSM Lite │    │ via DAI-USDS Exchanger│                          │
│  │ 1:1, 0 fee   │    │ 1:1, no fee           │                          │
│  └────┬─────────┘    └────┬──────────────────┘                          │
└───────┼───────────────────┼──────────────────────────────────────────────┘
        │                   │
        ▼                   ▼
┌─────────────────────────────────────────────────────────────────────────┐
│                          VAULT LAYER 2 (TERMINAL Yearn layer)            │
│                                                                          │
│  ┌─────────────────────────────┐    ┌────────────────────────────┐      │
│  │  yvUSDC-1                   │    │  yvUSDS-1                  │      │
│  │  0xBe53…6204                │    │  0x1828…47E8               │      │
│  │  ~22.2% sUSDS Lender        │    │  100% Spark USDS Compounder│      │
│  │  ~35.6% Yearn USDC (Morpho) │    │  sUSDS Lender: 0 (drained) │      │
│  │  ~30.3% stcUSD Pawn Broker* │    │  USDS Sky Rewards: 0       │      │
│  │  ~11.9% USDC→USDS Depositor │    │  (Sky USDS Staking / SPK)  │      │
│  │  Spark USDC Lender: 0       │    │                             │      │
│  └─────────┬───────────────────┘    └─────────┬──────────────────┘      │
│            │                                   │                          │
│            ▼                                   ▼                          │
│   sUSDS + Morpho Blue + Cap stcUSD         Sky USDS Staking Rewards      │
│   (*Pawn Broker not in default queue)      (SPK farm)                    │
└─────────────────────────────────────────────────────────────────────────┘

Effective endpoint mix for yvDAI-1's deployed DAI (September 14, 2026):
  ~37.3%  Sky USDS Staking  (via yvUSDS-1→Spark USDS Compounder + yvUSDC-1→USDC→USDS→yvUSDS-1)
  ~25.3%  Morpho Blue        (via yvUSDC-1 → Yearn USDC MetaMorpho → cbBTC/WBTC/wstETH)
  ~21.6%  Cap stcUSD         (via yvUSDC-1 → stcUSD/USDC Pawn Broker Market)
  ~15.8%  Sky sUSDS          (via yvUSDC-1 → USDC to sUSDS Lender)

Appendix: TimelockController Role Structure

TimelockController 0x88Ba032be87d5EF1fbE87336b7090767F367BF73 — same timelock used by 37+ Yearn V3 vaults including all six mainnet risk-1 vaults. getMinDelay() = 604800 (7 days).

Role	Holder	Type	Notes
DEFAULT_ADMIN	No holder	—	Never granted (admin = address(0))
TIMELOCK_ADMIN	Timelock itself	Contract	Self-governed
PROPOSER	Daddy/ySafe	6-of-9 Safe	Sole proposer
EXECUTOR	Daddy/ySafe	6-of-9 Safe	Direct execution
EXECUTOR	TimelockExecutor 0xf8f60bf9456a6e0141149db2dd6f02c60da5779b	Contract	Wrapper: Brain (3/8) + deployer EOA can call execute() through it
CANCELLER	Daddy/ySafe	6-of-9 Safe	Cancel pending proposals
CANCELLER	Brain	3-of-8 Safe	Cancel pending proposals

To shorten the delay, Daddy 6/9 must propose updateDelay(), wait 7 days during which Brain or Daddy can cancel, then execute. DEFAULT_ADMIN was never granted, so no party can self-grant PROPOSER or TIMELOCK_ADMIN to skip the flow.

---