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BasisDollarBasisDollarby0xF8E802f5adE72D09a601cebD027d00779f5f8C2B0xF8E8…8C2B

BDIP21: Implement Curve stableswap pool

Voting ended about 5 years agoSucceeded

This proposal can be found at https://forum.basisdollar.fi/t/bdip21-use-dao-resources-for-implementation-of-curve-stableswap-pool/

Background: Most DEXs operating on a liquidity pool (including Uniswap, ValueLiquid) operate as a constant function market maker. Curve (aka StableSwap) operates as a constant sum market maker. https://www.curve.fi/stableswap-paper.pdf

For a basket of assets operating at close to equilibrium (e.g. a basket of stablecoins): (a) When the token prices are closed to equilibrium (1 to 1), it’s performing close to a constant sum curve. (b) When the token prices are shifted away from the equilibrium, it’s performing close to a constant product curve. (c) The further the token prices are shifted away, the more slippage the invariant produces. This ensures that the pool can always provide liquidity even at extreme prices.

Recently, Curve has permitted stableswap pool creation for pools that consists of traditional stables (USDT, USDC, DAI) and algostables.

The benefits of implementing an algostable+USDT+USDC+DAI stableswap pool on Curve are: (1) Expands the audience for Basis Dollar; and (2) Generates interest in Basis Dollar from arbitrageurs who can close the gap between the ValueLiquid and stableswap pool.

Hence, other projects have also started looking at implementing stableswap pools. https://medium.com/basis-cash/stableswap-pools-and-algorithmic-stablecoins-b21ab5cb555f

Mechanism (How will this work?): (1) Create the stableswap pool. The initial peg would be 1 BSD to 1 USDC to 1 DAI to 1 USDT. (2) For the initial USDT in the pool, the DAO would swap some of the DAI and USDC into USDT. For example, the initial pool would consist of 40k BSD, 40k USDC, 40k USDT, 40k DAI. (3) The Curve LP token will be stakeable. That Curve LP token can be staked with vesting rewards in the form of BSDS rewards.***

***All BSDS rewards are currently locked into ValueLiquid contracts, therefore, there may need to be a requirement to migrate to a new BSDS token contract. Alternatively, the rewards that the DAO receives can be distributed to the Curve LP stakers. For the 1st phase, just implement Step (1) and (2) first.

Advantages:

  1. Expands audience/users for Basis Dollar with the new stableswap pool.
  2. Generates interest in BSD especially from arbitrageurs.
  3. The fees from transactions on the Curve stableswap pool will accrue to LP token holders. Furthermore, the LP token holders may also receive staking rewards mentioned above.

Disadvantages:

  1. May require new BSDS token contract as existing BSDS emissions are locked into the ValueLiquid contracts.

Off-Chain Vote

YES: Implement stableswap pool
5.15K 100%
NO: Do not implement s/swap pool
0 0%
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Timeline

Jan 22, 2021Proposal created
Jan 22, 2021Proposal vote started
Jan 25, 2021Proposal vote ended
Oct 26, 2023Proposal updated