BIP-89: Balancer V3 Deployment & Fee Split Adjustment on Optimism

Proposal

This proposal seeks to continue the collaboration with Balancer by deploying and running Balancer v3 on OP Mainnet. As Beets already runs Balancer v2 on OP Mainnet, running v3 builds on the successful collaboration between the Beets DAO and Balancer DAO.

In addition, this proposal seeks to align the Optimism deployment with the updated Balancer fee mode and Core Pool Framework as outlined in Balancer BIP-734 (https://forum.balancer.fi/t/bip-734-balancer-v3-launch-and-protocol-enhancements/6168). The following fee structure is proposed:

New v3 deployment:

• Protocol fees: 10% on yield-bearing asset yields, 50% on swaps.
• Core pool fee distribution: 70% voting incentives, 15% Beets, 15% Balancer.
• Non-core pool fee distribution: 50% Beets, 50% Balancer.

Adjusted v2 deployment:

• Protocol fees: 50% on yield-bearing asset yields, 50% on swaps.
• Core pool fee distribution: 70% voting incentives, 15% Beets, 15% Balancer.
• Non-core pool fee distribution: 50% Beets, 50% Balancer.

For comparison, the current fee structure is as follows:

• Protocol fees: 50% on yield-bearing asset yields, 50% on swaps.
• Fee distribution: 65% voting incentives, 17.5% Balancer, 17.5% Beets (10% to veBAL/vlAURA acquisition, 7.5% towards DAO treasury).

With the updated fee structure, Beets DAO will continue veBAL/vlAURA acquisition with at least 50% of the revenue Beets DAO gets from the Optimism deployment.

Motivation

Balancer v3 enables various technical advancements such as custom pools, a hooks framework as well as 100% boosted pools. It represents the latest advancement in the Balancer tech stack and positions Balancer tech as core infrastructure on OP Mainnet and other chains.

By allocating a portion of the fees towards veBAL or vlAURA, Beets DAO continues to ensure the strategic alignment to Balancer DAO. This proposal builds on the success of the Balancer v2 deployment on OP Mainnet, with Beets running both the v2 and v3 deployments in the future.

Impacts / Risk Assessment

Balancer v3 smart contracts have been audited by multiple top-tier audit firms: https://github.com/balancer/balancer-v3-monorepo/tree/main/audits The contracts have already been deployed on other blockchains such as Ethereum Mainnet and Gnosis Chain, securing more than USD 25m in TVL. Beets is already running a Balancer v3 deployment on Sonic. As with any smart contracts, there are risks involved in operating them, however the risks have been minimized by the safety-first approach of both Beets and Balancer.

Specification / Execution Plan

Deployment of the Balancer v3 on Optimism is expected to start once both Balancer DAO and Beets DAO approve the corresponding proposals. The fee split will be set up according to the specification outlined above.