Hi,
I’d like to gauge the communities thoughts on pursuing a Curve gauge now that they’ve deployed cross-chain gauges that receive $CRV as incentives.
It is my personal belief that an opportunity exists for Defrost.Finance to be the first native over-collateralised stablecoin in the Avalanche ecosystem to get a Curve gauge. Presently only three pools (atricrypto, Aave 3pool and renBTC/renBTC.e) are receiving $CRV emissions of approx. 0.04-3.91% APR.
The benefits of succeeding in getting a Curve Gauge are as follows:
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Legitamisation: Securing the vote of the Curve and Convex communities can be seen as a vote of confidence and approval for Defrost.Finance. Some of DeFi’s brightest minds operate within the Curve ecosystem and a gauge equates to their tacit approval that we offer value to the ecosystem without posing risk. Their approval is also likely to come with a review of our security which, if successful, is another boon for Defrost and make securing partnerships much easier.
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Increased incentives for LP’s: Securing a gauge will allow veCRV and vlCVX holders to vote for gauges they want to receive $CRV emissions. This will bolster the rewards (%APY) for liquidity providers.
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H2O peg: Having secured approval from the Curve and Convex communities for a gauge we’ll be giving arbitrageurs confidence to deploy 3CRV stablecoins (USDC/USDT/DAI) to purchase H2O at a discount and collectively push H2O back to peg before taking profit. They’ll have the confidence to execute this strategy over time because of the $MELT and $CRV rewards they’ll receive. For example, they could avail of a potential 6% arbitrage opportunity and, whilst waiting for peg to re-establish, farm $MELT at 10.2% APR + X% APR in $CRV.
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Marketing: Being the first native AVAX over-collateralised stablecoin to acquire a gauge within the ecosystem is an effective coup and will bring significant attention to the protocol. There exists significant potential to initiate a positive feedback loop, i.e. gauge approval and $CRV emissions incentivises arbitrage and return to peg, leveraged looping becomes attractive again increasing stability fees which increases $MELT value, increasing pool APR whilst looping offers more arbitrage opportunities, more volume through H2O3CRV pool giving more fees to veCRV stakers resulting in more votes for our gauge which subsequently results in more $CRV emissions. Starting the cycle all over again.
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Convex: If (when) Convex emissions go cross-chain H2O3CRV LP’s will be eligible for $CVX rewards as well.
Please feel free to suggest any additional benefits you think below in comments.
How do I propose we get there?
I believe the methodology to acquiring a Curve gauge is through offering ‘bribes’, i.e. incentivizing veCRV and vlCVX holders to vote in the affirmative for our gauge proposal in return for $MELT and/or $H2O tokens.
Bribes can be allocated via Andre Conje’s (https://bribe.crv.finance/) to veCRV holders and via (https://votium.app/) for vlCVX holders.
To date there have been two gauge proposals to add Curve gauges to AVAX pools but they, at the time of writing, have yet to hit quorum and thus will fail. These two proposals have not offered bribes/incentives to secure veCRV and vlCVX holders votes but this is not surprising as USDC/USDT will never do so and it’s unknown whether the proposer for the MIM pool is related to Abracadabra.Money and thus able to incentivise.
MIM/USDC.e/USDT.e
(https://dao.curve.fi/vote/ownership/135)
USDC/USDC.e
(https://dao.curve.fi/vote/ownership/136)
Thus I’d like to invite discussion from the community on whether they agree on whether this is a feasible proposal to pursue and if so, to what extent?
$MELT emissions could be redirected from existing farms to subsidize this endeavor at a rate to be determined by the DAO. Looking at (Llama Airforce) for every $1 spent in bribes equates to approximately $1.21 in $CRV emissions making this proposal attractive for LP’s and the protocol through stabilization of peg.
There are, of course, trade-offs of undertaking the above strategy, some of which are summarised below (feel free to add your thoughts below):
- Reduced $MELT emissions for farms as some % of emissions is used for bribes.
- Split $MELT emissions; some $MELT rewards will need re-directed directly to the H2O3CRV gauge on Curve, reducing the number of $MELT available for sMELT stakers to get through boosting.
- Technical assessment and impact (if any?) of collecting $CRV emissions when staking on Defrost.Finance
To date preliminary chats with people on Convex’s Discord have indicated that they are open to the idea but that we would need to prove the value proposition to them, i.e. increased volume through our pool (which is 6th most used pool presently with $234k of daily volume) which increases fees for Curve and Convex. However, I think we need to agree as a DAO what we want to do before formulating a proposal to take to Curve and Convex.
Please provide your feedback and thoughts below.
Thanks for your time,
A