Potential future system migration

Yearn have communicated their intent to continue support for all v2 vaults indefinitely, even past deployment of their upcoming v3 vaults. However, it is conceivable that at some point in future they would deprecate v2 vaults. In this case, they would:
  • Disable deposits to the LUSD Curve pool
  • Cease harvesting yield on the LUSD Curve pool
If this occurs, one would consider launching a new LUSD Chicken Bonds system that is hooked up to the v3 vault and encouraging users to migrate their funds.
It is important that if and when Yearn deprecate the v2 vault, all LUSD can be extracted from the old Chicken Bonds system via a combination of redemptions and chicken-outs.

What is the wind-down functionality?

The LUSD Chicken Bonds system contains "wind down" functionality whereby Yearn governance can prepare the system for migration by making all funds redeemable, with a one-time wind-down trigger.
When a suitable v3 vault is live, we would deploy a fresh instance of LUSD Chicken Bonds connected up to it - and encourage users to manually migrate.
Yearn governance can - once only - trigger the wind-down state. This immediately moves all funds in the Permanent bucket to the Reserve bucket, thus making those funds redeemable.
The wind-down state comes with the following changes to the system rules:
-New bond creation is disabled -Chicken In fees are waived -LUSD shifting is disabled
In the wind-down state, users are encouraged to withdraw their funds. Bonders should Chicken Out, and bLUSD holders should redeem. Users can then create bonds in the new LUSD Chicken Bonds instance which will be hooked up to the v3 Yearn vault.

Do Yearn control any Chicken Bonds funds?

The wind-down activation simply enacts the changes above, and changes Chicken Bonds’ internal system accounting: the Permanent bucket is emptied, and the funds it contained are added to the Reserve bucket. However, Yearn theoretically also have control over system funds equal in size to the Permanent bucket - see here [LINK - “Who has control over the Chicken Bonds funds?”].