Boosted H2O savings and boosted/reinforced USDC

This proposal is a 2 parter.

1st - In order to further incentivize buying and supplying H2O to the savings pool, we should allow for a MELT boost mechanism on this pool. Currently, we are boosting 14 million in H2O in curve which only worsens and incentivizes our issues of an H2O heavy pool, thus our consistent loss of peg. Why would we do this and then fail to allow boosting on the fix we created for the issue?

2nd - To create an incentivized and boost-enabled USDC pool using the Defrost UI to further incentivize USDC deposits withing Platypus. This is a mechanism that would need to be tested first, and if successful, I would further propose gradually moving most of the Curve pool rewards to this new pool. My suggestion is to start by doubling the rewards available on the USDC side and monitoring for how this affects/changes the peg and to see if we can confirm a correlation between higher Platypus USDC/H2O ratios and a change in ratios within the Curve pool. This could be a one time, temporary increase of rewards, to be sourced from the Curve emissions, and then a vote could determine whether to maintain, increase, or remove and return to the Curve pool the transferred emissions.

The goal of the combined proposals would be to seek to prove the effectiveness of gradually moving further from Curve as our primary source of liquidity to a source better suited to our needs, improve the peg, and Make Defrost Great Again. MDGA! :sweat_smile:

2 Likes

The APR on the USDC side of the PTP-H2O pool is already almost 20%… We don’t have any guarantee that trying to increase the USDC APR will help arb out the peg back to $1 on H2O. It’s a theory, and while I agree that we should try something I’m not particularly intrigued by that approach…

I still think if we’re going to go through the process of having the engineers produce another contract/addition to the DeFrost UI, then we should just cut straight to the point which is the AV3CRV balance in the Curve pool needing incentives. We can’t guarantee further USDC deposits into the PTP-H2O pool just like we can’t guarantee av3crv deposits into a new incentivized pool loop, but at least we know one would help for sure if the deposits do come in.

As I’ve had time to mull everything over, one thing is crystal clear…Users are almost always going to opt for multiple loops in the H2O vaults as it’s just too enticing from an APR perspective on the front end. That said, regardless of more H2O incentives, the looping on the front end will continue to put downward pressure on H2O. And we all know how to counteract that downward pressure.

I haven’t talked to the team on this yet, and I’m not saying my opinion is the end all be all, but this is where I’m at with all of it right now.

MGDA :saluting_face:

I’m well aware of what the coverage ratio is.

Incentivizing 3crv will not work. Simple as that, due to the way that the curve pool is designed. There is literally nothing stopping me from minting h20, exchanging for 3crv using curve, and depositing the 3crv for the incentives. This would lead to absolutely 0 change in the amount of 3crv in the pool, and just reward those using this method while continuing to leave us far under peg.

God forbid the team builds a new contract to fix their currently broken product. This. Isnt. Working. So what are we going to do? Wait is no longer an acceptable answer.

Besides which, no new contract would even need to be created to increase USDC side MELT rewards in Platypus, and then we could see whether the theory proves true or not, with little to no downside.

At worst, we are removing some small amount of rewards temporarily, primarily from the wallet that is messing up our ratio so hard in curve in order to test the theory. Which is a whole lot better than doing nothing. Doing nothing is just a guarantee that those Platypus APRs continue to drop as MELT value continues to drop.

  1. Incentives in the curve pool are for the LPs, not just for H2O of course. The imbalance and de-pegging of H2O are mostly due to the previous market looping operations. The curve pool is the major trading venue for H2O.
  2. But for H2O savings pool, it will be a totally different story. It is just working as a savings account in the bank. Exessive incentives in the savings pool are just another diversion in the Defrost monetary policy. It is not contributing any liquidity or have other utility but just gives out additional free rewards. Ultimately, it is like rewarding the positions when compounding the LP rewards as collaterals.
  3. As I replied in the other post, the pricing model on PTP is questionable and may not be decisive. Also, they can easily pause or freeze the factory pools, unlike Curve operating in a totally decentralized manner. (USDT has been paused from trading when depegging, and it also directly leads to the UST bad debt on us, as it froze the UST trading at that time, the liquidator cannot work)
    Also, though it appears to be a pool with single coin staking, it is still working as a trading venue like a curve pool. Whether the single coin incentives work or not is still doubtful.

@Mountainking Please take a moment and comment and my most recent proposal if you dont mind.

Disregard, I just noticed you already had