BIP-52: Deploy BEETS POL & bribe with Treasury Earnings on Optimism

This proposal has two parts:

1. Deploy $100k of Protocol Owned Liquidity (POL) as a BEETS/rETH 80/20 weighted pool on Beethoven X / Balancer Optimism
2. Enable redirection of a portion of Treasury revenue to vlAURA/veBAL bribes for the BEETS/rETH pool, with any additional emissions earnt by the POL also able to be used as bribes in subsequent gauge rounds.

Motivation:

This proposal would serve to increase BEETS liquidity on Optimism and seed the new bridged version of BEETS, while also allowing accelerated acquisition of veBAL & vlAURA by Beethoven X DAO Treasury.

The BEETS liquidity currently on Optimism was bridged using the now non-functional Multichain service, and Beethoven X / Balancer on Optimism currently hosts ~$6.5k of BEETS within a 40/40/20 liquidity pool. Deployment of a new version of bridged BEETS on Optimism was approved in BIP-49 and with technical components of that work nearing completion there will be need for liquidity in the new token.

Beethoven X DAO Treasury is well positioned to provide this liquidity, and would have the ability to benefit from the positive yield effects of the veBAL / vlAURA gauge systems.

By using a portion of Optimism DEx revenue currently earmarked for purchasing AURA / BAL to instead place gauge vote bribes we can direct AURA & BAL emissions to the pool with an expectation of increased acquisition as long as net veBAL / vlAURA bribe market ROI is positive.

The bribe ROI effect is currently further aided by Aura’s OP grant distribution program, which emits additional OP to gauge pools on Aura. Beethoven X DAO Treasury could benefit from this additional earning directly, and also by using the earnt OP as bribes to accelerate veBAL / vlAURA acquisition while bribe market ROI is positive.

The above flowchart illustrates the proposed additional mechanism for acquiring AURA & BAL, whereas currently the 10% of Optimism DEx revenue is used to directly purchase AURA / BAL for locking. This process would only be followed while there is expected gain from doing so, otherwise the existing process to purchase AURA & BAL will be used.

Impacts/Risk Assessment:

• Granting the ability to acquire vlAURA / veBAL through either purchase or gauge would allow flexibility to optimise accumulation rate per $ of Optimism DEx revenue. This could be used to accelerate accumulation and/or to free up cashflow for alternative uses.
• The ability to accelerate vlAURA / veBAL accumulation would allow increased discretion to direct incentives to pools on the Optimism DEx, thereby potentially increasing overall Beethoven X protocol and DAO revenue.
• The process would require an extra stage of calculation and action by DAO contributors in the fortnightly and monthly protocol fee processing cycles. This represents increased workload while also increasing uncertainty of vlAURA / veBAL acquisition rate due to added delays in realising the AURA/BAL and the changeability inherent in bribe markets relying on volatile tokens.
• The added complexity and changeability increases the risk of negative net gain, which in practice could be reduced by MDs factoring in a buffer in bribe ROI calculations.
• This pool would affect the dynamics of BEETS liquidity, likely increasing correlation to rETH while also deepening overall BEETS liquidity.
• The movement of BEETS from Treasury's wallet on Fantom to Beethoven X / Aura on Optimism represents increased bridge risk for BEETS token and greater exposure of Treasury assets to Aura Finance.
• The gauge related components of this proposal are dependent on approval by Balancer and integration of the pool with Aura.

Specification/Execution Plan:

With approval of this proposal, $80k of BEETS and $20k of rETH of POL will be used to seed a BEETS/rETH 80/20 pool on Beethoven X Optimism. The BEETS used for the pool will be the new version of bridged BEETS which uses Layer Zero’s OFT standard. Separately from this proposal, DAO contributors will also apply to Balancer governance for a gauge to allow direction of BAL & AURA emissions to the pool.

When the Balancer gauge is in place, Music Director’s will have the options to:

1. Place bribes for the pool instead of, or in addition to, purchasing AURA & BAL directly
2. Use additional emissions earnt by the POL as bribes for the pool

The aim would be to acquire a greater total value of AURA & BAL through the process, and so it would only be employed during times of expected overall gain for DAO Treasury. The amount of Optimism DEx revenue used as bribes may vary from 0-100% of the portion allocated to acquiring vlAURA & veBAL, according to bribe market and pool dynamics, with an aim of optimising returns for the DAO.