Though this proposal may be trying to maximize the utilization of the locked asset there is a reason that the assets are locked and users may not need to take on additional risk
Some potential risks and drawbacks based on my thoughts and users:
1. Risk to Stablecoin Holders: One major concern is that this proposal shifts significant risk onto stablecoin holders who generally prefer low-risk investments. By deploying the stablecoins held in the bridge into yield-generating strategies, these assets are no longer just idle but are actively invested, potentially exposing them to market risks which those holders might not have agreed to when they initially bridged their assets. This could lead to a loss of trust and potentially push users to seek alternatives where their funds are not used without their explicit consent for yield generation.
2. Potential Loss of Deposits: There’s a risk that large depositors might withdraw their funds from the Polygon PoS bridge due to the new risk profile introduced by the proposal. If the bridge starts using these funds to generate yield, it might deter future deposits, or even lead to current depositors moving their assets to other platforms perceived as safer or where they can retain control over the yield. This could undermine the bridge’s liquidity and overall utility.
3. Security and Trust Issues: The proposal involves managing a large sum of stablecoins through third parties like Morpho, Yearn, and Allez Labs, which introduces an element of counterparty risk. Any mismanagement or security breach could have severe consequences, impacting not just the bridge but the Polygon ecosystem as a whole. Critics argue that this setup might not align with the security expectations of users who deposit their funds into the bridge.
4. Philosophical and Ethical Concerns: There’s an ethical debate about using user’s funds without their direct consent for yield generation. This could be seen as a breach of trust, especially since users might deposit funds for reasons other than expecting a yield from the bridge itself. The debate centers around whether it’s appropriate for infrastructure to take such liberties with user assets.
5. Implementation and Governance Risks: Even if the proposal aims to enhance the ecosystem’s liquidity and yield, the actual implementation could be fraught with challenges. The governance structure proposed might not satisfy all community members, leading to potential conflicts or inefficiencies in decision-making. Additionally, the proposal’s success would heavily depend on the effectiveness of risk management strategies, which are not guaranteed to prevent all possible downsides.
These criticisms suggest that while the proposal aims to make use of idle assets for broader ecosystem benefits, it might come at the cost of user trust, increased risk, and potential operational complications.
Lets make it not more complicated untill the agglayer materializes completely. Voiting against this PIP