UST and Frax have announced supporting any 4Pool [UST,FRAX,USDC,USDT] metapool with subsidies. Currently, we have a metapool for 3Pool [USDC,USDT,DAI]. Although the waters are muddy with OTC deals for CVX votes, currently the Votium MTA expenditures generate the most revenue per MTA (Dune).
Given proposed subsidies by Frax(FXS) and UST(Luna), it would be wiser to reach out to those teams and shift our bribes to that pool. We can leave the decision making up to emissions allocators and simply add a dial for the CVX mUSD/4Pool. Ultimately, the metric of success would be how much mUSD is in the new pool. This will be determined by the total size of 4 pool and it’s A factor as well as the A factor of our factory pool but this can be left for analysis post dial and be additional information to guide emissions allocators.
If the A factor is very high, then the nightmare scenario is that a user could then swap either Frax or UST for mUSD and then redeem mUSD which drives down the save rate. Currently the amount of mUSD in Curve matches the amount in mSave. This means with a standard A factor = 100 about 75% of the pool could be 4 pool without much slippage. That implies about half of the mUSD supplied to the pool if at a 1:1 rate could be taken out and redeemed.
Remediation strategies: Set a low A factor.
Other negative impacts: I have long thought that mUSD/3Pool is a particularly safe Curve pool so that holders are more willing to hold in that pool than others with potentially higher CVX,CRV rewards. This strategy would reduce that difficult to measure aspect.
- Add an mUSD/4Pool Factory Pool with a low A factor (the lower the better)
- Get Gauge approval (may need to rally CVX votes for CRV gauge)
- Add an MTA emissions dial for mUSD/4Pool
Analytics to be provided as Guidance for Emissions voters
- Model the A factor of 4Pool and size of 4Pool and A factor for mUSD/4Pool to see how much mUSD could be extracted from the factory pool with low slippage.
- Measure the locked up mUSD/3Pool compared to others CVX stablecoin pools and the relative rewards in order determine the low risk factor if there is any.
- Combine those two elements with the amount of subsidies from Frax/UST in order to determine if the mUSD amount on curve would increase.
Analytics like this are just over my head unfortunately, so I can’t comment on your methodology.
I do feel really sussy about UST though, and I wonder if that pool is going to be safe in the long run. However, I’m sure it will generate a lot of profit for arb bots, since there’s going to be a fair bit of ‘jitter’ in the peg of those first two stables that will create a lot of differentials.
The analytics just aim to measure whether the amount of mUSD locked up in Curve per MTA emitted would increase (“profit”).
UST would not be integrated into mAsset basket. Thus, the mUSD/4Pool would not introduce additional risk to mSavers. It would only be a risk to the mUSD/4Pool holders.
That’s quite an interesting suggestion! We’ve been talking to the folks behind the 4Pool but are unsure of how to proceed at the moment.
- The deployment of the mUSD/4Pool on curve is permissionless?
- Is the deployment of the gauge also permissionless?
If that is the case, then there is a good opportunity to deploy and add or change a dial to direct bribing rewards towards it. But if we go the Emissions Controller bribe route, it might take a few weeks before we get going.
Personally, I am not really keen on the UST model and I agree with @trustindistrust that it’s somewhat sussy, however I can also see that this is a opportunity worth exploiting.
Agreeing with @dimsome here in spirit, and would like to say that replacing might not be perhaps the best move, if we could instead just add it to the dial and other places
Personally, I am deployed in the mUSD/3pool and would not want to lose my position’s incentivization in favour of the 4pool, but would love to add this on top to farm it while it is hot and good
Understood. Yes. So just getting the ball rolling on adding it seems wise. Governance allocations about bribes and risk/return can be decided later.
I’m actually not sure about deploying the pool being permissionless. I suspect that’s the difference between a factory pool and an official pool – I’m trying to remember how the whole Mochi USDM incident went down. I am confident that the gauge is not permissionless but I would think getting enough CVX votes would be easy since pools on top of 4Pool is what the 4Pool alliance (UST, Frax, Redacted, OHM?) has indicated is their intention.
Very interesting to catch up on this. I think we need to be careful as so much mUSD TVL sits in the 3 pool but I would be in favour of having another gauge for the 4 pool and seeing how it goes, eventually putting focus there if it is successful. Great to use momentum there for our benefit if possible. Thanks @Jeshli
We are looking into the deployment of the mUSD/4Pool. We do require that the 4Pool gets added first, however we could start our own governance around the dial.
As I see, we have 2 options:
- Replace the current Dial and bribe the new Pool
- Create a new dial to bribe the new Pool
I would prefer option 2, as this would allow MTA stakers to choose how much they want to allocate of the emissions towards the new pool.
Agree with option number 2. i.e. Create a new dial to bribe the new pool.
I, too, agree with option 2 as it allows maximum flexibility and freedom, as well as a clear voting outcome in the cycle.
Also agree that option 2 is the way to go here if we want to support this.
Maybe I am misunderstanding option 1, but I don’t think that we should ever consider pointing an existing dial to a different recipient unless this exactly retains the original intent of the dial.
Looks like this has gotten sufficient traction, so the next step would be to draft a formal proposal up for this.
I will mark the RFC as solved for now, unless any further strong opinions make their voice heard
Sooooooo, I guess we can close this one. No need to move forward with this.