[BIP-357] Enable GHO/LUSD Gauge [Ethereum]

PR with Payload

Summary:

This pool uses the ComposableStablePoolFactory-v5 which addresses the reentrancy vulnerability disclosed during February 2023. This gauge is uncapped.

This proposal is for a new pool GHO/LUSD to be created on Ethereum.

References/Useful links:

GHO

• Website
• Documentation
• Github Page
• Communities

LUSD

• Website
• Front List
• Documentation
• Github Page
• Communities

Protocol Description:

Aave Protocol The Aave Protocol is a decentralized liquidity protocol that is deployed across many EVM compatible networks including but not limited to Optimism, Arbitrum, Avalanche and Polygon. Currently, the Aave Protocol has a TVL of approximately $7.8 Billion.

Liquity Protocol Liquity is a decentralized borrowing protocol that allows you to draw 0% interest loans against Ether used as collateral. Loans are paid out in LUSD - USD-pegged stablecoin and need to maintain a minimum collateral ratio of only 110%. LUSD has proved its impeccable resilience in time by getting through severe market crashes untroubled. Currently, the Liquity Protocol has a TVL of approximately $678m.

Motivation:

GHO is a decentralized multi-collateral stable coin that is fully backed, transparent and native to the Aave Protocol.

Further details relating to GHO can be found here.

LUSD is the Liquity protocol stable coin. It uses ETH only as collateral. And LQTY is the secondary token issued by Liquity, capturing the fee revenue. Furthermore, LQTY stakers earn ETH and LUSD as rewards. And LUSD Stability pool depositors that earn LQTY and ETH.

Further details relating to LUSD can be found here.

Specifications:

1. Governance:

• AAVE and stkAAVE serve as the governance tokens for the Aave DAO. Holders can vote on proposals at both a Snapshot level and through the Aave DAO on-chain governance portal.

• Liquity has no governance. It is built to maximize trustlessness and decentralization.

2. Oracles:

• rateProvider0 (for GHO): 0x0 (none)

• rateProvider1 (for LUSD): 0x0 (none)

3. Audits:

Liquity

• Trail of Bits Security Assessment
• Audit by Coinspect
• Trail of Bits Liquity Protocol and Stability Pool Final Report
• Trail of Bits Liquity Proxy Contracts Report

Aave v3

• ABDK
• OpenZeppelin
• Trail of Bits
• Peckshield
• SigmaPrime

GHO

• Sigma Prime
• Sigma Prime
• ABDK
• OpenZeppelin-v2
• OpenZeppelin-v1

4. Centralization vectors:

• Aave Governance is decentralized, and all changes must go through a transparent and well-tested governance process.
• Liquity is built to have maximized resilience, so no centralization vectors.

5. Market History:

• GHO is yet to be released by the Aave DAO.
• For LUSD, there can be a small premium on LUSD results from a structural unbalance between offer and demand. The situation led to a considerable demand surge for censorship-resistant stablecoins that only LUSD can answer since there is no other alternative with a significant TVL. Nevertheless, hard peg mechanisms are built into the system between $1 and $1.10, and soft peg incentives in between. Further, Chicken Bonds are also helping to reduce the stablecoin premium, and this effect will strengthen as the protocol grows.

6. Value:

• The BPT from this pool has the potential to be included in the Aave Safety Module which will provide a source of rewards encouraging users to deposit into the liquidity pool creating TVL and swap fee revenue for Balancer DAO.

Pool Details

Link to Pool: GHO / LUSD Pool - TBA Link to Gauges: GHO / LUSD Gauge - TBA

Transaction: The DAO Multisig 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will interact with the AuthorizerAdaptor at 0x8F42aDBbA1B16EaAE3BB5754915E0D06059aDd75 and call performAction with the GaugeController at 0xC128468b7Ce63eA702C1f104D55A2566b13D3ABD for the target(address) argument and using 0x3a04f900 followed by the gauge address TBD and the corresponding gauge type for the data(bytes) argument. data(bytes) : TBD

Disclosure:

This proposal is the sole work of Matthew Graham and Dydymoon from Tokenlogic. This proposal has been funded via the Butter Delegation Campaign.

Details on TokenLogics delegation platform can be found here.

Disclaimer

The payload in its current form is incomplete. This BIP will become obsolete in the event if the pool and gauge specifications are not added to the payload by June 17th 2023, 08:00 PM CET and successfully completes the Balancer Maxi review cycle.