Authors
CLever Core Team
Summary
Allocate 300000 $vlCVX votes for clevUSD/FraxBP for the next 6 epochs. In exchange, CLever will offer Frax 15,000 CLEV tokens (0.75% of supply) vested over 3 months from the first vote.
Background
CLever is a risk-minimized lending platform for high quality tokens such as CVX and FRAX. CLever loans are denominated in clevTokens, which are assets paired to their specific collateral and representing its future yield. clevTokens are treated as equivalent to their respective collateral by the system, so they carry no risk of liquidation and no exposure to price oracles. CLever does not charge interest on loans, but instead a fixed rate on yield harvests, which means borrowing costs do not change with any pool utilization or liquidity.
CLever FRAX allows users to mint clevUSD against several Frax-based stablecoin collateral strategies, each with its own maximum LTV and independent yield. For CLever FRAX, all yields are swapped into FRAX, which is used to pay down their clevUSD system debt 1:1, then distributed via a stability mechanism called the Furnace.
In order for borrowers to utilize their borrowed tokens, CLever provides incentivized swap pools pairing each clevToken with its associated collateral. Sufficient liquidity in these pools facilitates swapping with reasonable slippage, and incentives create a yield farming opportunity for LPs of liquid FRAX with a unique risk profile. Since clevTokens represent future yield rather than a pegged asset (see next section) LP pairs are correlated, limiting the scope of impermanent loss to LPs and making these farms unique in the market.
clevTokens are not wrappers of their underlying collateral tokens. Instead they represent future yield generated by collateral strategies, denominated in the collateral tokens. clevTokens can only be minted against their associated collateral, and only up to the maximum LTV for each given strategy (currently 30-50% for FRAX). During bootstrapping CLever also imposes an overall borrowing limit for each strategy. These limits will be raised as liquidity grows.
clevTokens can eventually all be exchanged for corresponding real collateral tokens at 1:1 via the Furnace, so they can be considered a zero coupon bond with indefinite maturity. If the furnace currently holds collateral tokens the swap is immediate, but users can deposit clevTokens to the Furnace even if there are no collateral tokens currently available. In this case, users share the upcoming harvests proportionally with any other Furnace depositors. New harvests to the Furnace are released linearly over 1-2 weeks (depending on the collateral) which creates a smooth continuous burn rate/bond repayment and prevents timing exploits when the system is oversubscribed. The time required to convert clevTokens into their real underlying asset via the Furnace is determined by the collateral yield rate(s), as well as how many clevTokens are sharing those harvests in the Furnace.
Since clevTokens represent future assets rather than current ones, they can trade at a discount representing the time value of those tokens like any bond. Borrowers swap when the discount is sufficiently small and, on the other side of the equation, users can buy clevTokens from the Curve pool to arbitrage the discount. This arbitrage can be repeatedly looped between the Furnace and the Curve pool as the Furnace converts clevTokens to their paired collateral assets.
CLEV Tokenomics
CLEV is CLever’s native token and it uses Curve’s ve- tokenomic system, with lockers sharing platform revenue and progressively increasing governance power. CLever applies fees to the collateral token harvest yield, the majority of which will be distributed to veCLEV holders. This makes liquidity mining (or bribe payments) more sustainable than simple inflation because CLEV is a proxy for real, ongoing platform revenue in CVX, FRAX, and any future collateral tokens. The operation of CLever makes it a net buyer of CVX and FRAX. Locking CLEV is marketed as a set-and-forget way to earn a growing stable of hodl-worthy tokens.
Motivation:
Increasing liquidity and visibility for the clevUSD/FRAXBP pool is critical to the operation of CLever. It would also be beneficial and additive to the ecosystem in the following ways:
- CLever’s model directly supports demand for underlying collateral strategies like FRAXBP farms by facilitating the creation of leveraged farming positions.
- CLever provides unique new farming opportunities and by creation of yield bond markets and (liquid) clevToken-collateral farming.
Proposal
In order to create a deeper pool and to attract liquidity which will support clveUSD - Frax swaps we propose that Frax vote with 300,000 vlCVX for the clevUSD/FRAXBP pool for the next 6 epochs on Votium. In exchange, CLever will offer Frax 15,000 CLEV tokens (0.75% of supply) vested over 3 months from the first vote.
For: Allocate 300000 $vlCVX votes for clevUSD/FraxBP for the next 6 epochs.
Against: Do nothing
