[BIP-886] Enable Gauge for Nerite Surge eeUSDC-yUSND Stable Pool with 2% Cap on Arbitrum

PR with Payload

https://github.com/BalancerMaxis/multisig-ops/pull/2511

Summary

Enable a Balancer gauge for the Nerite Surge eeUSDC-yUSND Stable Pool with a 2% cap on Arbitrum.

This pool provides deep liquidity between yUSND (yield-bearing USND) and eeUSDC (Euler vault USDC). To bootstrap liquidity, Nerite will provide 4,000 USND in bribes distributed over the next 2 months to vlAURA voters who support this gauge.

References/Useful Links

• Balancer Pool: https://balancer.fi/pools/arbitrum/v3/0x483bc7fe92fc392305dd97d4d3363e0e0a7f144d

• Child Gauge Contract: https://arbiscan.io/address/0x73873ca1b9dcfa7b6fe00eead8ac805e7b444d33

• Website: https://app.nerite.org/

• Documentation: http://docs.nerite.org/

• USND Token Contract: https://arbiscan.io/token/0x4ecf61a6c2fab8a047ceb3b3b263b401763e9d49

• yUSND Token Contract: https://arbiscan.io/token/0x252b965400862d94bda35fecf7ee0f204a53cc36

• GitHub: https://github.com/NeriteOrg/nerite

Protocol Description

Nerite Protocol is a decentralized borrowing protocol on Arbitrum that issues USND, an overcollateralized stablecoin based on Liquity V2 architecture.

USND is the protocol's native stablecoin:

• Overcollateralized by 9 crypto assets: WETH, wstETH, rETH, rsETH, weETH, tETH, ARB, COMP, tBTC

• Superfluid SuperToken enabling streaming payments every second

• Maintains $1 peg through redemption mechanism

• Current supply: 2,384,468 USND

yUSND (this pool's token) is yield-bearing USND:

• Created and managed by Yearn Finance

• ERC-4626 vault that optimizes USND deposits across all stability pools

• Earns yield from borrower interest payments, liquidation fees, and NERI incentives

• No lockup period - liquid and redeemable anytime

eeUSDC (paired token) is Euler's yield-bearing USDC vault.

Pool Type: Balancer V3 Stable Pool optimized for low-volatility stablecoin pairs.

Motivation

This gauge is needed to:

1. Bootstrap Liquidity: Attract LPs to provide deep liquidity for yUSND/eeUSDC trading

2. Reduce Slippage: Enable efficient swaps between yield-bearing stablecoin assets

3. Strengthen USND Utility: Create a liquid secondary market for yield-bearing USND

4. Incentivize Long-term LPs: BAL rewards + native yield create attractive APY

5. Ecosystem Growth: Connect two major Arbitrum stablecoin protocols

Bribe Commitment: 4,000 USND over 2 months (8 epochs) distributed pro-rata to vlAURA voters.

Specifications

1. Governance

Nerite Protocol Governance:

• Governance Token: NERI (not yet live)

• Governance Model: Minimal governance, official "friendly fork" of Liquity V2 with exclusive Arbitrum rights

• Core Protocol: Immutable contracts that cannot be upgraded

• Future NERI Powers: Update debt limits, direct 25% of protocol revenue, control treasury

• Restrictions: NERI holders CANNOT mint USND, upgrade protocol, add collateral, or change fees

Key Addresses:

• DAO/Governance: 0x108f48E558078C8eF2eb428E0774d7eCd01F6B1d

• USND Token: 0x4ecf61a6c2fab8a047ceb3b3b263b401763e9d49

2. Oracles

Nerite leverages Api3's OEV (Oracle Extractable Value) oracles as its primary price feed solution:

• Api3 provides reliable price data for all 9 collateral types

• Generates additional protocol revenue through OEV rewards

• Captures value that would otherwise leak to MEV bots and arbitrageurs

• No external oracles required for USND/yUSND pricing (internal accounting based on vault shares)

3. Audits

Nerite-Specific Audits:

• Sherlock audit in collaboration with 0xSimao - Report

• Automated vulnerability testing with Octane on all pull requests

• All contracts verified on Arbiscan

Liquity V2 Base Protocol:

• Official "friendly fork" with exclusive Arbitrum rights and Liquity team support

• Base protocol audited by Cantina and Code4rena

• Built on battle-tested Liquity V1 architecture (billions in TVL since 2021)

4. Centralization Vectors

Minimal Centralization:

• Smart Contracts: Immutable core logic (cannot be upgraded)

• Governance: Minimal; NERI holders have limited powers (debt limits, 25% revenue, treasury only)

• Oracles: Decentralized Api3 OEV oracles

• Liquidations: Permissionless

• Restrictions: Cannot mint USND, upgrade protocol, add collateral, or change fees

5. Market History

Pool History:

• Pool Address: 0x483bc7fe92fc392305dd97d4d3363e0e0a7f144d

• Gauge Address: 0x73873ca1b9dcfa7b6fe00eead8ac805e7b444d33

• Created: January 11, 2025

• Current TVL: $160,386

• Volume (24h): $11,701

• Pool Link: https://balancer.fi/pools/arbitrum/v3/0x483bc7fe92fc392305dd97d4d3363e0e0a7f144d

• Gauge Link: https://arbiscan.io/address/0x73873ca1b9dcfa7b6fe00eead8ac805e7b444d33

Price Stability:

• USND maintains peg via redemption mechanism (Liquity model)

• No depeg events since launch

• yUSND is yield-bearing vault token (ERC-4626), not a stablecoin

6. Value

Primary Liquidity:

• Key liquidity venue for yUSND on Arbitrum

• Enables efficient yUSND ↔ USDC swaps via eeUSDC

• Provides exit liquidity for Nerite Stability Pool depositors

Fee Generation:

• Stable pool optimized for high volume, low slippage

• Both tokens yield-bearing, attracting LPs organically

• Consistent volume from Nerite user flows and arbitrage

Value to Balancer:

• Strengthens Arbitrum stablecoin liquidity hub

• Attracts liquidity from two growing protocols (Nerite + Euler)

• Low IL risk, consistent fees

• 4,000 USND bribes demonstrate long-term commitment

Technical Specification

The Balancer Maxi Omni-Sig 0x9ff471F9f98F42E5151C7855fD1b5aa906b1AF7e will interact with the GaugeAdderv4 at 0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd and call the addGauge function with the following arguments: gauge(address):0x6F7F4E708d54e314892Df3d6960e1dd987F75141 gaugeType(string): Arbitrum