Thread for ideas & discussion on maintaining & managing ibXXX stablecoin pegs on curve pools. For a full list of Curve pools see here or here which includes a discussion on pools being used.
It is worth noting that Curve pools have differing amplification coefficients (“A”), which impacts the point at which tolerance for imbalance between assets is tested. This detail can be found on the page for each pool on Curve directly.
Members of the team or community are encouraged to suggest, discuss or debate possible solutions
The protocol currently relies on the following tools to assist with managing & maintaining the ibXXX stablecoin pegs on curve pools;
- The AMM at Fixed Forex which allows users access to ibXXX assets in exchange for providing USD-based stablecoins
- Assets that control & direct (through voting) new Curve emissions to Curve pools
- Providing additional incentives for liquidity miners seeking yield through setting weekly allowances for rKP3R allocations to pools
- Pool allocation is determined by vKP3R votes at Fixed Forex
The Keep3r multisig has also, previously, enabled ibXXX stablecoin holders to exit via the AMM when treasury-held MIM has been available to offer. Note; this is not currently offered due to the treasury no longer holding any MIM
Other protocols have faced similar dilemmas in experimenting with and finding ways to maintain the peg of their stablecoins. Although each protocol differs there are some elements of their tools, methods & solutions that may prove useful for Fixed Forex peg (albeit with suitable variations).
Keep3r also has the unique challenge that it is attempting to maintain peg across 6 stablecoins (ibEUR, ibCHF, ibGBP, ibAUD, ibKRW, ibJPY) whereas most previous protocols have been working towards maintenance of peg on a single stable asset
Price Stability Module (PSM);
Most famously popularized by MakerDAO’s implementation of a PSM to support 1:1 swaps between USDC & DAI (and visa versa) at a fixed fee
- MakerDAO Docs
- MakerDAO Forum Post proposing PSM
- MakerDAO Forum Post - explaining background/causes leading to need for PSM
- MakerDAO Forum post - poll for launch & fee setting
- PSM Risk Assessment from MakerDAO Risk Team
- Debate/Discussion on MarkerDAO Forum - for resetting fees for use
Tight-Range UNI V3 Managed Position;
Again, most famously popularized by MakerDAO’s implementation using ERC-20 wrapped tight-range Uni V3 positions which also incorporates the ability for users to leverage their position to loop the position. Users earn fees based on utilization of the Uni pair within the ranges defined
- Uni V3 position leverage overview
- Live version on Oasis app
- MakerDAO Forum Application
- Risk Assessment from MakerDAO Risk Team
Algorithmic Market Operations (AMO);
Implemented by FRAX Finance & Angle Finance in support of their FRAX USD and agEUR EURO stablecoin tokens. Each team is deploying unique strategies that seek to maintain peg of the token & simultaneously earn additional fees on behalf of the protocol
- FRAX Overview on AMOs - Medium Article
- FRAX Docs - including Detailed Explainations of each AMO strategy
- FRAX Governance Forum Proposal for AMO
- Automation of Frax AMOs from FRAX forum
- Angle Overiew on AMOs - Angle Docs
- Initial Discussion on Angle Forum for Implementing AMOs
Treasury Intervention / Protocol Owned Liquidity (POL);
Both methods have been used by Keep3r in the recent past to help support the peg of assets in Curve pools.
- Treasury intervention is where the Keep3r treasury acquires the relevant asset, through purchase or swaps, and then;
- either enters the LP on the imbalanced side (at which point this becomes POL) OR;
- swaps between the LP in an attempt to rebalance
Note; This requires a dependency that the treasury has liquid funds available to enact these measures
- Protocol Owned Liquidity has most notably been enabled through the Olympus Pro bond program. Keep3r previously used this program to acquire ibXXX+USDC LP pairs & KP3R+ETH LP pairs through providing new KP3R token emissions in return for the sale of LPs
Once a protocol achieves a POL through purchasing LP position then all fees earnt on those LPs are returned to the protocol treasury as profits, including any incentives claimable to the LPers in pool
- Olympus Pro Spotlight on Keep3r POL Program - Medium Article
- Olympus Pro Introduction - Medium Article
This is the categorization for any other proposed solution that can maintain the peg within Curve pools. This definition may contain new innovations proposed by members of the community or other methods utilized by other protocols that have not been otherwise noted above
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 which of the categorizations of peg maintenance type, from the list above, applies to each suggestion.