This group of proposals (to be voted as three separate proposals) - seeks to approve an AMO for a 2pool (BB-E-FRAX | BB-E-USDC) on Balancer, an FXS gauge for that pool, and a pilot bribe program for the Balancer ecosystem.
Background & Motivation
Frax has become the master of the Curve wars and Balancer is another frontier. There is a lot of utility and liquidity over at Balancer making use of its unique product offerings. For example things like 20%/80% pools which many protocols prefer for governance token liquidity, and LBP for token launches coordinated through PrimeDAO and Fjord Foundry. Also protocols like Olympus are stationing their main liquidity pools over on Balancer.
Balancer also has the ability for protocols to have deployed liquidity in boosted pools such as the pool referred to in this proposal. These pools have the following advantages:
High Capital Efficiency
Boosted Pools are designed to deliver high capital efficiency by enabling users to provide trade liquidity for common tokens while forwarding idle tokens to external protocols. This gives liquidity providers the benefits of Euler on top of the swap fees they collect from trades.
Superfluid, Consolidated Liquidity
Nesting pool tokens creates a powerful avenue to make swaps between any stablecoin and underlying borrowing protocol tokens in the Boosted Pool. On top of that, any token in a pool with a Boosted Pool Token can tap directly into the underlying tokens.
Example of an already deployed USD pool
We need FRAX to be everywhere and Balancer is likely to be a part of the overall mix when it comes to medium-term liquidity destinations.
Relevantly, Aura proposes to be the Convex of the Balancer ecosystem and AURA holders direct the veBAL locked as auraBAL. It can be more economical to bribe AURA holders than veBAL holders directly to direct BAL rewards to a preferred pool.
Presently there is a profitable opportunities for bribing veBAL or veAura holders.
The 2pool (BB-E-FRAX | BB-E-USDC) would be initially funded by an AMO deposit of liquidity and allow trades between FRAX and USDC in a capital efficient manner - while earning lending interest from Euler. It would also allow nesting of other tokens with the 2pool for example frxETH-2pool, FXS-2pool, FPI-2pool, etc, and allow direct trading between USDC or FRAX and the nested token (for example ETH->FRAX, ETH->USDC). This can also serve as a rail between Curve liquidity and Balancer liquidity.
The 2pool has been deployed by Balancer core team at Balancer .
A veBAL gauge is being voted on here and is well supported by Balancer governance here Snapshot .
Security & Risk
The Balancer v2 codebase was audited by Trail of Bits and Open Zepplin in 2021 - see Audits - Balancer.
This set of proposals seeks to approve:
- FIP-186 - an AMO for 2pool (BB-E-FRAX | BB-E-USDC) on Balancer to be calibrated with parameters by core contributors with AMO injection limits up to 6,000,000 USD value in the first month and up to 12,000,000 USD from the second month
- FIP-187 - Approve FXS gauge for 2pool (BB-E-FRAX | BB-E-USDC)
- FIP-188 - Approval for up to 100,000 USD worth of FXS or cvxCRV in bribes for a pilot bribe program to veBAL or AURA holders (only where profitable to do so) in order to boost liquidity to the 2pool(BB-E-FRAX | BB-E-USDC) or other pools pairing with 2pool (BB-E-FRAX | BB-E-USDC). The trial program will run for three months. Earned AURA or BAL may be compounded where appropriate, treated as protocol income to be used for operations or provided to veFXS holders
For: Approve individual proposal (each will be voted on individually)
Against: Do nothing