Yearn — yvUSDS-1

Contract Addresses

Core yvUSDS-1 Contracts

Contract	Address	Type
yvUSDS-1 Vault	0x182863131F9a4630fF9E27830d945B1413e347E8	Yearn V3 Vault (v3.0.3), Vyper minimal proxy
Underlying asset (USDS)	0xdC035D45d973E3EC169d2276DDab16f1e407384F	Sky USDS stablecoin
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 — holds 12 of 14 vault roles
Brain (Operations)	0x16388463d60FFE0661Cf7F1f31a7D658aC790ff7	3-of-8 Gnosis Safe — REVOKE_STRATEGY, QUEUE, REPORTING, DEBT, DEPOSIT_LIMIT, PROFIT_UNLOCK, DEBT_PURCHASER, EMERGENCY
Security	0xe5e2Baf96198c56380dDD5E992D7d1ADa0e989c0	4-of-7 Gnosis Safe — DEBT, MAX_DEBT, EMERGENCY
Strategy Manager (Timelock)	0x88Ba032be87d5EF1fbE87336b7090767F367BF73	TimelockController — 7-day delay for strategy additions and accountant changes. Self-governed (TIMELOCK_ADMIN held by the timelock itself)
Keeper	0x604e586F17cE106B64185A7a0d2c1Da5bAce711E	yHaaSRelayer — REPORTING only
Debt Allocator	0x1e9eB053228B1156831759401dE0E115356b8671	Minimal proxy — REPORTING + DEBT

Yearn V3 Infrastructure

Contract	Address
Vault Factory (v3.0.3)	0x5577EdcB8A856582297CdBbB07055E6a6E38eb5f
Vault Original (v3.0.3)	0xcA78AF7443f3F8FA0148b746Cb18FF67383CDF3f
TokenizedStrategy v3.0.3 (sUSDS Lender, USDS Sky Rewards Compounder)	0x254A93feff3BEeF9cA004E913bB5443754e8aB19
TokenizedStrategy v3.0.4 (Spark USDS Compounder)	0xD377919FA87120584B21279a491F82D5265A139c
TokenizedStrategy v3.1.0 (Grove USDS Compounder)	0x310f5Db015E9d6E542fd41bd4542640790791e76

Active Strategies (4 in default queue, 2 with debt)

Default queue order at block 26077066:

#	Strategy	Name	Activation	Current Debt (USDS)	Allocation
1	0x0868076663Bbc6638ceDd27704cc8F0Fa53d5b81	USDS Sky Rewards Compounder	2025-05-16	0	0%
2	0xc9f01b5c6048B064E6d925d1c2d7206d4fEeF8a3	Spark USDS Compounder	2025-07-14	364,574.52	3.47%
3	0x3F2dE801629116A83B9734bB72012A554e01CfC1	sUSDS Lender	2025-05-14	0	0%
4	0xe060B80438771f13078048c3b0d930efECA6E622	Grove USDS Compounder	2026-09-21	10,155,032.07	96.53%

Removed from queue at prior reshape (between April 27 and May 5, still absent at September 28):

• Aave V3 Lido USDS Lender (0xC08d81aba10f2dcBA50F9A3Efbc0988439223978)
• Aave V3 USDS Lender (0xD144eAFf17b0308a5154444907781382398AaC61)

Current funding posture: 96.53% Grove USDS Compounder (Sky USDS → GROVE farm), 3.47% Spark USDS Compounder (Sky USDS → SPK farm). The sUSDS Lender is drained to 0 (not shut down — Brain can re-fund it), and the USDS Sky Rewards Compounder remains queued at 0 debt (with ~833 USDS of unreported dust in its totalAssets()). Last reports: Grove Compounder 2026-09-28 (last_report = 1790565059), Spark Compounder 2026-09-26 (last_report = 1790392859), sUSDS Lender 2026-08-22 (last_report = 1787379419, consistent with the final drain), USDS Sky Rewards Compounder 2026-02-05 (stale, consistent with zero allocated debt).

Strategy Protocol Dependencies

Protocol	Strategy	Allocation
Sky USDS → GROVE StakingRewards	Grove USDS Compounder	96.53%
Sky USDS → SPK StakingRewards	Spark USDS Compounder	3.47%
Sky Savings Rate (sUSDS)	sUSDS Lender	0% (drained, queue only)
Sky USDS → SKY StakingRewards (rewards ended Jan 26, 2026)	USDS Sky Rewards Compounder	0% (queue only)

Audits and Due Diligence Disclosures

Yearn V3 Core Audits

Auditor	Date	Scope	Report
ChainSecurity	May 2023	V3 Vaults + Tokenized Strategy (v3.0.0)	2 PDFs
yAcademy	Jul 2023	V3 Vaults (v3.0.1)	PDF
Statemind	Mar 2024	V3 Vaults (v3.0.2)	PDF
yAudit	Jun 2026	V3 Vaults + Tokenized Strategy (v3.1.0)	2 PDFs

Dates follow the audit folder names in yearn-security/audits. The v3.0.3 vault release used by yvUSDS-1 was reviewed internally by the Yearn team rather than re-engaging external auditors; the external audits cover the core architecture. Source: yearn-vaults-v3 GitHub releases. The Grove USDS Compounder runs on TokenizedStrategy v3.1.0, which is covered by the June 2026 yAudit review. TODO: no audit or ySec review artifact for the GroveCompounder strategy contract itself was located.

Sky / MakerDAO Audits (Underlying Protocol)

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

Auditor	Coverage	Notes
ChainSecurity	9 audits covering USDS, sUSDS, Endgame Toolkit, LockStake, VoteDelegate	Core security partner
Cantina	10 audit reports including sUSDS (Sep 2024) and USDS (Jul 2024)	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

Sky StakingRewards farms (GROVE, SPK, SKY): all three are verified on Etherscan as the Sky Endgame Toolkit StakingRewards contract, owned by the Sky DSPauseProxy (0xBE8E3e3618f7474F8cB1d074A26afFef007E98FB), and reviewed under the Endgame Toolkit audit umbrella (ChainSecurity, Cantina).

Strategy Review Process

All strategies pass through Yearn's formal 12-metric risk-scoring framework (RISK_FRAMEWORK.md) — review level (ySec security review), test coverage, complexity (sLOC), risk exposure, centralization risk, protocol integration count, etc. yvUSDS-1 is registered as Category 1 in the Role Manager (getCategory(vault) == 1), the strictest tier.

Bug Bounty

• Yearn (Immunefi): active bug bounty. Max payout: $200,000 (Critical). Scope includes V3 vaults. 40 smart contracts in scope. Median resolution: 18 hours
  • https://immunefi.com/bounty/yearnfinance/
• Yearn (Sherlock): also listed at https://audits.sherlock.xyz/bug-bounties/30
• Sky / MakerDAO (Immunefi): active bug bounty. Max payout: $10,000,000 (Critical). Scope includes DAI, USDS, sUSDS, PSM, USDS Staking Rewards
  • https://immunefi.com/bug-bounty/sky/
• Safe Harbor (SEAL): Yearn is not listed on the SEAL Safe Harbor registry

On-Chain Complexity

The yvUSDS-1 system is low complexity:

• 2 funded strategies on a single chain (Ethereum), both staking USDS into Sky StakingRewards farms
• No conversion hops for principal — the underlying asset (USDS) is the farms' staking token. Only reward tokens (GROVE, SPK) are converted back to USDS
• No leverage, no looping, no cross-chain bridging
• Standard ERC-4626 deposit/withdrawal
• Blue-chip protocol dependency (Sky)
• Vault is immutable (non-upgradeable Vyper minimal proxy); strategies are non-upgradeable (see Programmability)

The main accounting subtlety is reward harvesting. The Grove Compounder claims GROVE on each report and kicks it into a Yearn Dutch auction (0xF3318007c41539b691b49D3e898560AB5BB966A3; want = USDS, receiver = the strategy, minimum price 0.006 USDS/GROVE, governance-only kick). The Spark Compounder converts SPK back to USDS. Reward-token prices affect yield only; staked USDS principal is not exposed to GROVE or SPK prices.

Historical Track Record

• Vault deployed: October 8, 2024 (deployment tx) — ~23.7 months in production
• TVL: 10,519,606.58 USDS at the September 28 snapshot — well within the 100M USDS deposit limit. TVL is up ~68.9% from the July 13 snapshot of ~6.23M and up ~44.4% from 7.29M on September 14; still down ~70% from the ~35.24M April 27 high
• PPS trend: 1.000000 → 1.111456 (~11.15% cumulative return over ~23.7 months, ~5.5% annualized)
• Security incidents: None known for this vault or for the Yearn V3 framework generally
• New strategy and reallocation (September 14 → 28): the Grove USDS Compounder addStrategy() was scheduled at the Strategy Manager timelock on September 14 (tx) and executed on September 21 (tx). First debt allocation was 7.41M USDS on September 21 (tx), rising to 10.16M by September 22 (tx); Spark Compounder debt fell from ~9.26M to ~0.36M over the same period. The strategy contract was deployed August 16, 2026 (tx), so it has ~1 week of production history in this vault
• sUSDS drain (July 13 → September 14): the sUSDS Lender was drained from ~5.24M USDS to 0 (final drain August 22, 2026, after oscillating between ~2.3M–5.2M through July–August), and all debt moved to the Spark USDS Compounder
• Prior reshape (April 27 → May 5): Aave V3 Lido USDS Lender and Aave V3 USDS Lender both removed from the default queue; sUSDS Lender debt was drained to zero
• Yearn V3 track record: V3 framework has been live since May 2024 (~28 months). No V3 vault exploits

Yearn protocol TVL: ~$203.3M total across all chains (DeFiLlama, September 28, 2026). Ethereum dominant at ~$180.7M.

Sky / sUSDS / USDS Staking track record:

• USDS launched as part of Sky Endgame (2024)
• sUSDS TVL: ~4.47B USDS (sUSDS.totalAssets() at snapshot)
• USDS → GROVE farm: deployed June 23, 2026 (tx); ~180.8M USDS staked; rewardRate() = 38.84 GROVE/s; rewards funded by a VestedRewardsDistribution (0xAf7a108B4fB0b2F65E1Acc9E1a548abe482559C4); current period ends October 5, 2026
• USDS → SPK farm: ~556.3M USDS staked; rewardRate() = 36.07 SPK/s; current period ends October 2, 2026
• No security incidents on USDS / sUSDS / USDS StakingRewards since launch

Funds Management

yvUSDS-1 is 100% deployed across two strategies at the September 28 snapshot: the Grove USDS Compounder (96.53%) and the Spark USDS Compounder (3.47%). The sUSDS Lender and USDS Sky Rewards Compounder both hold zero debt.

Strategy 1: Grove USDS Compounder (96.53% allocation)

Contract: 0xe060B80438771f13078048c3b0d930efECA6E622 — verified GroveCompounder source on Etherscan

Mechanic:

1. Stake: _deployFunds() calls STAKING.stake(amount, 2009) on the hard-coded Sky USDS → GROVE farm (0x4E41488C19cD35EB4de3083Fc3e204854c75c86a). The staking contract is a constant, so it cannot be repointed.
2. Harvest: each report claims GROVE and, above a 10,000 GROVE minimum, kicks it into the strategy's Yearn auction (0xF3318007c41539b691b49D3e898560AB5BB966A3). Auction proceeds (USDS) return to the strategy and are re-staked.
3. Withdraw: _freeFunds() calls STAKING.withdraw(amount) — atomic, 1:1 in USDS.

Risk profile: principal is staked USDS, withdrawable 1:1. The farm's withdraw() has no notPaused modifier (only stake() does), and recoverERC20() reverts for the staking token, so neither a pause nor the farm owner can block or seize staked USDS. GROVE price and auction clearing affect yield only. The strategy is new: first debt on September 21, 2026.

Strategy parameters:

• Activated: 2026-09-21 (TokenizedStrategy v3.1.0)
• Last reported: 2026-09-28 (last_report = 1790565059)
• Staked balance at snapshot: 10,155,032.07 USDS (yvUSDS-1 holds 100% of strategy shares; totalAssets() == current_debt)
• Health check: doHealthCheck() = true, lossLimitRatio() = 0, profitLimitRatio() = 10000
• Performance fee: 0 (strategy level); management() and emergencyAdmin() = Brain (3-of-8); no pending management transfer
• Keeper: yHaaSRelayer (0x604e586F17cE106B64185A7a0d2c1Da5bAce711E)
• Farm share: 10.16M of ~180.8M USDS staked (~5.6%)

Strategy 2: Spark USDS Compounder (3.47% allocation)

Contract: 0xc9f01b5c6048B064E6d925d1c2d7206d4fEeF8a3

Stakes USDS into the Sky USDS → SPK farm (0x173e314C7635B45322cd8Cb14f44b312e079F3af) and converts SPK (0xc20059e0317DE91738d13af027DfC4a50781b066) back to USDS. Same farm contract design as the GROVE farm: unpausable withdraw(), staking token excluded from recoverERC20(). Activated 2025-07-14; last reported 2026-09-26 (last_report = 1790392859). The strategy has other depositors: yvUSDS-1 holds ~43.2% of its shares (307,630.65 of 711,734.86), and the strategy holds ~847,160 USDS staked in total. management() = Brain.

Queued (zero current debt): sUSDS Lender

Contract: 0x3F2dE801629116A83B9734bB72012A554e01CfC1

Deposits USDS into the Sky Savings vault sUSDS (0xa3931d71877C0E7a3148CB7Eb4463524FEc27fbD) earning the Sky Savings Rate. current_debt = 0 (drained August 22, 2026); not shut down (isShutdown() = false), so Brain can re-fund it. Activated 2025-05-14; last reported 2026-08-22 (last_report = 1787379419). Holds ~57.43 sUSDS of residual dust.

Queued (zero current debt): USDS Sky Rewards Compounder

Contract: 0x0868076663Bbc6638ceDd27704cc8F0Fa53d5b81

Stakes USDS into the Sky USDS → SKY farm (0x0650CAF159C5A49f711e8169D4336ECB9b950275; staking() getter), earning SKY (0x56072C95FAA701256059aa122697B133aDEd9279). That farm's reward period ended January 26, 2026 (periodFinish), which is consistent with the strategy being unfunded since February. current_debt = 0 (with ~833 USDS of unreported dust in totalAssets()); activated 2025-05-16; last reported 2026-02-05.

Removed from default queue (at the April 27 → May 5 reshape; still absent at September 28)

• Aave V3 Lido USDS Lender (0xC08d81aba10f2dcBA50F9A3Efbc0988439223978)
• Aave V3 USDS Lender (0xD144eAFf17b0308a5154444907781382398AaC61)

The rationale for removing both Aave V3 USDS strategies has not been independently verified. Reintroducing either would require a fresh addStrategy() proposal at the Strategy Manager TimelockController (7-day delay).

Accessibility

• Deposits: Permissionless — anyone can deposit USDS and receive yvUSDS-1 (ERC-4626 standard). Subject to 100M USDS deposit limit
• Withdrawals: ERC-4626 standard. Users redeem yvUSDS-1 for USDS. The vault unwinds through the default queue; both funded strategies unstake USDS atomically from their Sky farms
• No cooldown or lock period
• Fees: 0% management fee, 10% performance fee (taken via accountant during process_report)
• Profit unlock: 3 days

Collateralization

• 100% on-chain USDS backing. All deposits are USDS, staked in first-party Sky StakingRewards contracts
• Collateral quality: USDS itself is backed by Sky's over-collateralized loan book and RWA Treasury bill investments (inherited from MakerDAO). Staked USDS is withdrawable 1:1
• No leverage — both active strategies are simple stake products, no borrowing
• Positions are fully redeemable — withdraw() on the farms is not pausable

Provability

• yvUSDS-1 exchange rate: Calculated on-chain via ERC-4626 standard (convertToAssets() / convertToShares()). Fully programmatic, no admin input
• Strategy positions: each compounder's totalAssets() is balanceOfStake() + balanceOfAsset(), read from the Sky farm on-chain (Grove: 10,155,032.07 USDS staked at snapshot)
• Reward rates: set by Sky governance via the farms' rewardsDistribution, visible on-chain (rewardRate(): 38.84 GROVE/s, 36.07 SPK/s at snapshot)
• Profit / loss reporting: Profits are reported by keepers via process_report() and locked for gradual distribution over 3 days (profitMaxUnlockTime = 3 days). Losses are immediately reflected in PPS

Liquidity Risk

• Primary exit: Redeem yvUSDS-1 for USDS via ERC-4626 withdraw() / redeem(). This triggers the funded strategies' withdraw(), which unstakes USDS from the Sky farms atomically in the same transaction
• Deep underlying: the GROVE farm holds ~180.8M USDS staked (yvUSDS-1's Grove position is ~5.6%); the SPK farm holds ~556.3M USDS. Unstaking returns the vault's own USDS and does not depend on other stakers' liquidity
• No DEX liquidity needed — the exit is via Sky's own contracts (unstake), not DEX AMMs
• Same-value asset: USDS-denominated vault token — no price-divergence risk from the underlying
• No withdrawal queue or cooldown — atomic redemption
• Pause does not block exits: the farms' paused flag only gates stake(); withdraw() stays callable. A pause would stop new deposits into the strategies (Grove's availableDepositLimit() returns 0 while paused), not redemptions
• Deposit limit: 100M USDS cap — generous relative to current TVL of 10.52M USDS

Note on cascading withdrawals and holder concentration: 73.72% of TVL is held by two Yearn depositor strategies — yvUSDC-1's USDC to USDS Depositor (0x39c0aEc5738ED939876245224aFc7E09C8480a52, 5,547,017.21 USDS, 52.73%; ~28.3% of yvUSDC-1 TVL) and yvDAI-1's DAI to USDS Depositor (0xAeDF7d5F3112552E110e5f9D08c9997Adce0b78d, 2,207,991.38 USDS, 20.99%; ~30.0% of yvDAI-1 TVL). A Brain debt rebalance in either parent vault can move most of this TVL in one transaction. Each layer settles atomically.

Centralization & Control Risks

Governance

The yvUSDS-1 vault uses the standard Yearn V3 governance pattern via the Yearn V3 Role Manager contract — identical configuration to the other five risk-1 vaults.

Governance hierarchy (vault roles(address) bitmasks at block 26077066):

Position	Address	Threshold	Roles on Vault
Daddy (ySafe)	0xFEB4acf3df3cDEA7399794D0869ef76A6EfAff52	6-of-9	12 of 14 vault roles (all except ADD_STRATEGY_MANAGER and ACCOUNTANT_MANAGER)
Brain	0x16388463d60FFE0661Cf7F1f31a7D658aC790ff7	3-of-8	REVOKE_STRATEGY, QUEUE, REPORTING, DEBT, DEPOSIT_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

ySafe 6-of-9 multisig signers include publicly known contributors: Mariano Conti (ex-MakerDAO), Leo Cheng (C.R.E.A.M.), 0xngmi (DeFiLlama), Michael Egorov (Curve), and others (source).

Governance assessment:

1. No EOA role concentration — all sensitive roles are held by multisigs, the timelock, or automated bots
2. Strategy additions and accountant changes pass through a 7-day timelock (getMinDelay() = 604800). The Grove Compounder addition followed this path (scheduled September 14, executed September 21)
3. Self-governed timelock — TIMELOCK_ADMIN belongs to the timelock itself; reducing the delay also requires 7 days. DEFAULT_ADMIN was never granted (admin = address(0))
4. Standard Yearn governance — same pattern shared across 37+ vaults
5. Immutable vault — no proxy upgrade path
6. Debt moves are not timelocked — Brain (DEBT) can move the full TVL between already-added strategies in one transaction, as it did on September 21–22. MAX_DEBT is held by Daddy, Security and the timelock, not Brain; all four strategies have max_debt = 100M USDS

Programmability

• Exchange rate (PPS): Calculated on-chain algorithmically via ERC-4626. Fully programmatic, no admin input
• Vault operations: Deposit / withdraw are permissionless on-chain transactions
• Strategy profit / loss: Reported programmatically by keepers via process_report(). Profits unlock linearly over 3 days
• Debt allocation: Managed by both the Debt Allocator (automated) and Brain multisig (manual)
• V3 vaults are immutable — no proxy upgrades, no admin-changeable implementation.
• Strategies are not upgradeable. Each strategy delegates its ERC-4626 accounting to a TokenizedStrategy implementation whose address is a compile-time constant (tokenizedStrategyAddress) in BaseStrategy. BaseStrategy writes that address to the EIP-1967 implementation slot once at construction "so etherscan picks up the interface"; nothing updates it later, and the EIP-1967 admin slot is 0x0. Implementations: v3.0.3 0x254A93feff3BEeF9cA004E913bB5443754e8aB19 (sUSDS Lender, USDS Sky Rewards Compounder), v3.0.4 0xD377919FA87120584B21279a491F82D5265A139c (Spark Compounder), v3.1.0 0x310f5Db015E9d6E542fd41bd4542640790791e76 (Grove Compounder). Strategy management() (Brain, 3-of-8) can change parameters such as auction settings, keeper, and health-check limits, and can shut a strategy down, but cannot change strategy logic or redirect staked USDS. No pending management transfers on any strategy.

External Dependencies

Dependency	Criticality	Notes
Sky USDS → GROVE StakingRewards	Critical	96.53% of allocation via Grove USDS Compounder. ~180.8M USDS staked; deployed June 2026. Owner: Sky DSPauseProxy (48-hour GSM delay on MCD_PAUSE 0xbE286431454714F511008713973d3B053A2d38f3)
USDS itself	Critical	The underlying asset of the vault — failure of USDS would be terminal regardless of strategy mix
Sky USDS → SPK StakingRewards	Low	3.47% via Spark USDS Compounder. ~556.3M USDS staked
GROVE token / Yearn auction	Yield only	Reward token sold for USDS through a Dutch auction with a 0.006 USDS minimum price. Affects yield, not principal
Sky Savings Rate (sUSDS)	Standby	sUSDS Lender is in the queue with 0 debt (drained Aug 22, not shut down)

Dependency quality: all funded dependencies are first-party Sky contracts plus the underlying USDS token. Sky has 8+ years of history (inheriting MakerDAO's track record), ~4.47B USDS in sUSDS, and a $10M bug bounty. At this snapshot ~96.5% of capital sits in one farm contract that is ~3 months old. Principal risk in that farm is limited to the StakingRewards code and USDS itself: withdraw() cannot be paused, and the owner cannot recover the staking token. Sky governance changes are subject to the 48-hour GSM delay.

Operational Risk

• Team: Yearn Finance — established since 2020, publicly known contributors. The ySafe 6-of-9 has 9 named signers including prominent DeFi figures
• Governance: Standard Yearn V3 Role Manager — same pattern across 37+ vaults
• Documentation: Comprehensive Yearn V3 documentation. Strategy code verified on Etherscan
• Legal: Yearn Finance has converted ychad.eth into a BORG via YIP-87, wrapping it in a Cayman Islands foundation
• Incident response: Yearn has demonstrated incident response across 4 historical events (all V1 / legacy). V3 framework has not been tested under stress. The $200K Immunefi bug bounty provides a responsible disclosure channel
• V3 immutability: Vault and strategy logic cannot be upgraded — this eliminates upgrade risk but means bugs cannot be patched in place; a critical bug requires shutting down the strategy or deploying a new vault and migrating users
• Recent allocation activity (September 14 → 28): Grove USDS Compounder added through the 7-day timelock and funded to 96.53%; Spark Compounder reduced to 3.47%; TVL rose from 7.29M to 10.52M USDS (+44.4%), largely from the yvUSDC-1 USDC to USDS Depositor (2.36M → 5.55M USDS)
• Earlier activity (July 13 → September 14): sUSDS Lender drained to 0 (final drain August 22, 2026), moving the vault from an ~84/16 sUSDS / Spark split to 100% Spark
• Prior reshape (April 27 → May 5): sUSDS Lender debt drained from ~7.4% to 0; two Aave V3 USDS strategies removed from the default queue; vault TVL dropped ~83%. Rationale not independently verifiable on-chain

Monitoring

Existing Monitoring Infrastructure

Yearn maintains an active monitoring system via the monitoring repository. yvUSDS-1 is actively monitored:

• Large flow alerts (protocols/yearn/alert_large_flows.py): runs hourly (automation/jobs.yaml). yvUSDS-1 is in the monitored vault list. Alerts on deposits / withdrawals exceeding threshold via Telegram
• Timelock monitoring (protocols/timelock/timelock_alerts.py): runs hourly and alerts on operations scheduled at the Yearn TimelockController (Strategy Manager) — this is the channel that surfaces new addStrategy() proposals such as the Grove Compounder
• Timelock delay check (protocols/yearn/check_timelock_delay.py): runs daily, alerts if getMinDelay() drops below 7 days on any chain

Key Contracts

Contract	Address	Monitor
yvUSDS-1 Vault	0x182863131F9a4630fF9E27830d945B1413e347E8	PPS (convertToAssets(1e18)), totalAssets(), totalDebt(), totalIdle(), Deposit / Withdraw events
Grove USDS Compounder (96.53%)	0xe060B80438771f13078048c3b0d930efECA6E622	totalAssets() vs current_debt, isShutdown(), lastReport() frequency, claimableRewards()
Grove auction	0xF3318007c41539b691b49D3e898560AB5BB966A3	Kicks / settlements; minimumPrice() changes
Spark USDS Compounder (3.47%)	0xc9f01b5c6048B064E6d925d1c2d7206d4fEeF8a3	current_debt, isShutdown(), keeper report frequency
sUSDS Lender (queued, 0 debt)	0x3F2dE801629116A83B9734bB72012A554e01CfC1	current_debt re-funding event, isShutdown()
USDS Sky Rewards Compounder (queued, 0 debt)	0x0868076663Bbc6638ceDd27704cc8F0Fa53d5b81	current_debt re-funding event, isShutdown()
Sky USDS → GROVE farm	0x4E41488C19cD35EB4de3083Fc3e204854c75c86a	rewardRate(), periodFinish(), totalSupply(), paused()
Sky USDS → SPK farm	0x173e314C7635B45322cd8Cb14f44b312e079F3af	rewardRate(), periodFinish(), paused()
Upstream depositors	0x39c0aEc5738ED939876245224aFc7E09C8480a52, 0xAeDF7d5F3112552E110e5f9D08c9997Adce0b78d	yvUSDS-1 balanceOf() — share of TVL
ySafe (Daddy)	0xFEB4acf3df3cDEA7399794D0869ef76A6EfAff52	Signer / threshold changes, submitted transactions
Strategy Manager (Timelock)	0x88Ba032be87d5EF1fbE87336b7090767F367BF73	CallScheduled targeting the vault; getMinDelay()
Accountant	0x5A74Cb32D36f2f517DB6f7b0A0591e09b22cDE69	Fee changes, config updates

Critical Events to Monitor

• PPS decrease — any decrease in convertToAssets(1e18) indicates a loss event. Should only increase
• Timelock proposals — any CallScheduled at the Strategy Manager targeting the vault (new strategies, accountant changes); review during the 7-day window
• Debt allocation changes — DebtUpdated events, especially moves that put >50% of TVL into a strategy with <30 days of history, or re-funding of the sUSDS Lender / USDS Sky Rewards Compounder
• Upstream concentration — combined balanceOf() of the two Yearn depositor strategies above 80% of totalSupply(), or a single-block change of more than 25% of TVL
• Emergency actions — Shutdown event on vault; StrategyShutdown event or emergencyWithdraw() call on any funded strategy
• ySafe / Brain / Security signer or threshold changes — governance integrity
• Farm reward changes — GROVE rewardRate() or periodFinish() lapsing without renewal (would zero the Grove Compounder's yield)
• Sky StakingRewards owner actions — setPaused, setRewardsDistribution, setRewardsDuration on the GROVE or SPK farm (visible 48 hours ahead via the Sky GSM)

Monitoring Functions

Function	Contract	Purpose	Frequency
convertToAssets(1e18)	Vault	PPS tracking	Every 6 hours
totalAssets()	Vault	Total TVL	Daily
totalDebt() / totalIdle()	Vault	Capital deployment ratio	Daily
strategies(address)	Vault	Per-strategy debt, last report time	Daily
get_default_queue()	Vault	Withdrawal queue composition	Weekly
balanceOf(depositor)	Vault	Upstream Yearn vault share of TVL	Daily
getThreshold() / getOwners()	ySafe	Governance integrity	Weekly
getMinDelay()	Strategy Manager (Timelock)	Delay change detection	Daily
rewardRate() / periodFinish()	GROVE farm, SPK farm	Reward program status	Weekly
ssr()	sUSDS	Savings rate	Weekly

Reassessment Triggers

• Time-based: Reassess in 6 months (March 2027) or annually
• TVL-based: Reassess if TVL exceeds 50M USDS or changes by more than ±50% from the September 28 snapshot of 10.52M
• Allocation / diversification:
  • if a non-Sky venue is funded, or any strategy other than a Sky farm compounder takes more than 10% of debt
  • if the Grove Compounder reports a loss, is shut down, or its debt is re-routed with no funded replacement
  • if the GROVE farm reward period lapses without renewal while the Grove Compounder holds most of the debt
• Strategy changes (addStrategy() proposals at the Strategy Manager TimelockController, 0x88Ba032be87d5EF1fbE87336b7090767F367BF73, 7-day delay):
  • any new strategy proposed for inclusion — re-review during the 7-day timelock window
  • any new strategy with leverage, looping, cross-chain bridging, or non-blue-chip routing
  • re-introduction of either removed Aave V3 USDS strategy
• Vault-of-vaults composition: reassess if another Yearn V3 vault begins routing into yvUSDS-1, or if upstream depositor strategies exceed 80% of TVL
• Sky-specific:
  • StakingRewards owner actions on the GROVE or SPK farm, or migration of either farm
  • any change to the USDS contract (upgrade, governance vote)
• Incident-based: any V3 exploit, strategy loss, governance change, or Sky / MakerDAO incident
• Governance-based: ySafe / Brain / Security signer or threshold changes; any change to the timelock delay (would itself require 7 days)

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Appendix: Contract Architecture

Snapshot at on-chain query (September 28, 2026, block 26077066). Full addresses are in Contract Addresses.

┌──────────────────────────────────────────────────────────────────────┐
│                          UPSTREAM DEPOSITORS                          │
│  yvUSDC-1 → USDC to USDS Depositor  — 5.55M USDS (52.73% of TVL)      │
│  yvDAI-1  → DAI to USDS Depositor   — 2.21M USDS (20.99% of TVL)      │
└──────────────────────────────────┬───────────────────────────────────┘
                                   ▼
┌──────────────────────────────────────────────────────────────────────┐
│                          VAULT LAYER                                  │
│  yvUSDS-1 (v3.0.3, immutable)  TVL 10,519,606.58 USDS, 0 idle         │
│   ├── 10,155,032.07 → Grove USDS Compounder (96.53%, v3.1.0)          │
│   └──    364,574.52 → Spark USDS Compounder (3.47%, v3.0.4)           │
│                                                                       │
│  Queued, 0 debt: sUSDS Lender; USDS Sky Rewards Compounder            │
│  Removed (Apr 27 → May 5): Aave V3 Lido USDS / Aave V3 USDS Lenders   │
└──────────────────────────────────┬───────────────────────────────────┘
                                   ▼
┌──────────────────────────────────────────────────────────────────────┐
│                          UNDERLYING (Sky StakingRewards)              │
│  USDS → GROVE farm  ~180.8M staked   GROVE → USDS via Yearn auction   │
│  USDS → SPK farm    ~556.3M staked   SPK → USDS                       │
│  Owner: Sky DSPauseProxy (48h GSM); withdraw() not pausable           │
│                  $10M Immunefi bug bounty (Sky)                       │
└──────────────────────────────────────────────────────────────────────┘

Appendix: TimelockController Role Structure

TimelockController 0x88Ba032be87d5EF1fbE87336b7090767F367BF73 — deployed at block 24,242,692 with admin = address(0). Same timelock used by 37+ Yearn V3 vaults including all six mainnet risk-1 vaults.

Timelock Roles

Role	Holder	Type	Notes
DEFAULT_ADMIN	No holder	—	Never granted (admin = address(0) at construction). No one can grant / revoke roles outside the propose → wait → execute flow
TIMELOCK_ADMIN	Timelock itself (0x88Ba032be87d5EF1fbE87336b7090767F367BF73)	Contract	Only the timelock can admin its own roles. Config changes (delay, role grants) must go through the 7-day delay
PROPOSER	Daddy/ySafe (0xFEB4acf3df3cDEA7399794D0869ef76A6EfAff52)	6-of-9 Safe	Sole proposer — no one else can initiate timelocked operations
EXECUTOR	Daddy/ySafe (0xFEB4acf3df3cDEA7399794D0869ef76A6EfAff52)	6-of-9 Safe	Direct execution
EXECUTOR	TimelockExecutor (0xf8f60bf9456a6e0141149db2dd6f02c60da5779b)	Contract	Wrapper — delegates to its internal executor list (Brain + deployer EOA)
CANCELLER	Daddy/ySafe (0xFEB4acf3df3cDEA7399794D0869ef76A6EfAff52)	6-of-9 Safe	Cancel pending proposals
CANCELLER	Brain (0x16388463d60FFE0661Cf7F1f31a7D658aC790ff7)	3-of-8 Safe	Cancel pending proposals

Why the 7-day delay cannot be bypassed

To shorten the delay, an attacker would need to (1) control Daddy 6/9 to propose updateDelay() — only Daddy can propose; (2) wait 7 days, during which Brain or Daddy can cancel; (3) execute via Daddy, Brain (via TimelockExecutor), or the deployer EOA — but the operation is already visible on-chain for 7 days. DEFAULT_ADMIN was never granted, so no one can self-grant PROPOSER or TIMELOCK_ADMIN to skip the flow.

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