Discussion; Curve Pool Optimization

Purpose;

Thread for encouraging ideas & discussion on optimizing ibXXX stablecoin pools on Curve. A full list of current Curve pools is included in the “Background” section below.

Members of the team or community are encouraged to suggest, discuss or debate possible new implementations.

Current Liquidity Pools;

ibEUR Pools;

ibCHF Pools;

ibGBP Pools;

ibAUD Pools;

ibJPY Pools;

ibKRW Pools;

Challenges;

The Keep3r protocol comes under pressure in two main areas with regards to liquidity pools on Curve;

1. Attracting liquidity
2. Maintaining balance of assets in pools

1. Attracting Liquidity;
Keep3r has two main methods of attracting liquidity to pools. These are;

  • Incentivizing the pool by utilizing treasury-held gauge vote directing assets (such as veCRV or vlCVX) to ensure new CRV emissions are directed to pools containing Fixed Forex assets
  • Further incentivizing the pool by directing new KP3R token emissions to the pool in the form of rKP3R

For the first of these two methods, the main challenge is the strain it puts the protocol under to accumulate gauge vote directing assets, in particular, this is a challenge due to the number of stables and pools that have to be supported. The protocol acquired 798,701 CVX tokens at a total cost of $21.4m between 19th December 21 & 24th March 22, and acquired 552,196 CRV at a total cost of $1.5m in April 22.

On the second, the main impacts will be on the relative market price of the KP3R token (at a basic level, higher volume of available token = lower price) but is also further impacted by the volume of emissions allocated to incentive curve pools (determined by the Multisig) & by the lack of aligned incentives for current vKP3R holders to direct new rKP3R allocations to each pool (issue further discussed in this forum post)

A further issue arises where the assets pooled alongside Fixed Forex stables are not currently being incentivized either on the CRV emission side or, in some cases, at all by the protocols that own the assets on the other side of the pool. A short summary;

  • ANGLE only currently incentivizes the agEUR + ibEUR pool with ANGLE tokens (i.e. no CRV emissions directed to this pool)
  • For USDC paired pools, Circle does not contribute any kind of incentives at all
  • For Synthetix assets (i.e. sEUR, etc.) there are no SNX rewards allocated to the pools

2. Maintaining balance of assets in pools;
The challenge of maintaining a balance of assets in each pool is further explained and outlined in this forum post with an expectation that when imbalances occur there are either clear methods incentivizing users to restore the peg or the protocol takes on this burden


Directions for suggesting changes or amendments to pools

Please use the comments section below to add any new suggestions, or to debate any suggestions proposed by other community members.

It would be helpful if you could indicate what benefits, risks or supplementary steps should be taken to ensure peg of adjusted pools.

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Suggestion; Switch USD pools for FRAXBP

For pools where ibXXX assets are paired with USD stables, it would be a good idea to consider switching from USDC to the FRAXBP as the paired asset in each case

Benefits/Motivation;
As of the launch of FRAXBP, which is now live the FRAX team has committed to;

  • Frax will also strive to be an active partner for pools that decide to pair with the FraxBP by contributing to voting incentives for FraxBP metapools (Note; a metapool is any pool that pairs with FRAXBP)
    • Voting incentives are likely to happen on the Votium platform
  • With the whitelisting of FRAX to lock their CRV as veCRV, any veCrv Frax locks can be used for promoting Frax pools or metapools on the Curve gauge system
  • Metapools may receive a share of incentives based on organic TVL of the FraxBP in each pool. A maximum of 20% of yield from the FraxBP protocol-owned liquidity may be applied to each metapool and 50% of such yield applied to all metapools in total. (Note: Organic TVL, TVL not affected by incentives or gauge weight from Frax, is determined by the Frax Team.)

This would immediately provide some relief to Keep3r as it would no longer be the sole party incentivizing TVL to these pools

Additional Considerations;

  • Due to sUSD also being paired with FRAXBP in a metapool pair, this would allow for ease of future integration of sUSD onboarding and offboarding from ibXXX assets via integration of the AMM with the relevant curve pools.
  • It would therefore also make sense to allow USDC & FRAX as inbound and outbound assets on the AMM.
  • Should also be timed to ensure that any proposed change to the allocation of rKP3R rewards to gauges is harmonious with this change in order to secure maximum potential of TVL growth of the pool
  • Could be further supported in implementation by establishing peg maintenance strategies
  • There may be future opportunities to collaborate with the FRAX team on the Keep3r Jobs side, via automation of tasks

References;

Implementation;
Would likely require new proposals to be made in alignment with the FRAX team on both the FRAX forum & through Curve governance.

The Keep3r protocol could utilize its substantial vlCVX holding to vote positively for the switch to FRAXBP pairs for ibXXX assets

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Suggestion; Consolidate EUR pools into a single pool

For pools where ibEUR is paired with other assets (agEUR & sEUR) look to consolidate this into a single pool. Note; there are currently two separate pools for ibEUR

Benefits;
Would benefit the protocol & end-users of ibEUR in the following ways;

  • For the protocol it would simplify allocation of votes to gauges securing CRV emissions/incentives on pool
  • The ANGLE team is already providing incentives to the agEUR+ibEUR pair in the form of ANGLE rewards but also has the potential to reallocate some of their own gauge votes to this pool (currently controlled by the ANGLE Multisig and voting for the 3EURpool), this would benefit the ANGLE team as they wouldn’t be the sole participant generating incentives
  • The ANGLE team also have established partnerships for ramping into & out-of agEUR, which would allow access to the same functionality for LPers in this pool (note this is available to users of the agEUR+ibEUR pool today, but not the ibEUR+sEUR pool).
  • Would allow the ANGLE team & users ease of access to swap through Synthetix atomic exchanges to other assets
  • Would greatly simplify pool selection/options for holders of ibEUR
  • Would reduce pressure on protocol to maintain peg on multiple ibEUR pools, consolidating focus

As per the suggestion for USD pools this could provide some relief to Keep3r as it would no longer be the sole party incentivizing TVL to these pools (& with deeper TVL it may also create a pathway or self-interest for the Synthetix team to incentivize this pool)

References;

  • See current ibEUR & agEUR curve pools

Additional Considerations;

  • Should be launched alongside peg maintenance strategies, to ensure a balanced pool at launch and the promise of peg being stable post-launch
  • May present future opportunities to collaborate with the ANGLE team, including in the spaces of;
    • Complimentary AMO stratgies
    • Asset listing to lending/borrowing markets
    • Automation of tasks
    • Ramping partners
  • Should also be timed to ensure that any proposed change to the allocation of rKP3R rewards to gauges is harmonious with this change in order to secure maximum potential of TVL growth of the pool
  • Should be paired with a plan to ensure deeper availability and ease of access on Ethereum network of sEUR either through;
    • Working together to list sEUR on Euler, Aave or Compound (or perhaps all three)
    • Working in partnership with Iron Bank to stimulate incentives for sEUR supply & borrow in ETH market
    • Supplementing with an AMO strategy that ensures ongoing supply of sEUR to the newly proposed pool

Implementation;
Would likely require new proposals to be made in alignment with the ANGLE team on both the ANGLE forum & through Curve governance.

ANGLE team is not likely to support until reassurances around the areas outlined in “Additional Considerations” are addressed

The Keep3r protocol could utilize its substantial vlCVX holding to vote positively for the switch to a new EURO based 3 pool consisting of agEUR, ibEUR & sEUR

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