EGP-20: Onboard yvCurve-agEUR-EUROC-f

Author(s): Mariam - Twitter Type: Asset Onboarding Proposal Date Proposed: <2023-01-10> Date Ratified: TBD

References

• Yearn Strategy
• Angle Protocol Landing Page
• Angle Analytics
• Angle Docs
• Angle Governance Forum
• Angle Contracts
• agEUR-EUROC Curve Pool
• EUROC by Circle page

Sentence Summary

This proposal is a temperature check for the onboarding of yvCurve-agEUR-EUROC-f to Element Finance.

Paragraph Summary

A discussion has been initiated with the Element team about creating a fixed-rate market for the biggest Euro stablecoins pool on Ethereum, based on the Yearn vault created for this pool.

Motivation

Element Finance does not support a Euro-denominated strategy. The APY for all the existing pools supported by Element Finance is sourced from pools including volatile crypto assets or USD-pegged stablecoins.

On the flip side, Angle Protocol has launched several Euro stables pools including the biggest Euro stables pool on Ethereum mainnet: the agEUR-EUROC pool on Curve Finance.

Onboarding this pool on Element Finance would provide a resilient and fixed yield source for Euro users while protecting them against change risks.

The pool is consistently used by swappers on Curve and supported by Angle Protocol through its veCRV voting power.

Creating a fixed-yield market on top of yvCurve-agEUR-EUROC-f will be appreciated by Euro native yield seekers and long-term depositors seeking yield from their Euro holdings.

More generally, the benefits would be:

• Diversified yield source
• Euro-stablecoin holders attraction
• Consistently strong APY supported by voting power
• Long-term depositors attraction
• Trustless and battle-tested contract from Curve

This proposed integration could be a first step to future integrations of agEUR pools on Element Finance.

Specification

Asset Classification

1.Name of the proposed asset.

Yearn vault for Curve agEUR-EUROC Factory (yvCurve-agEUR-EUROC-f)

2.Strategy or single yield source.

a. Underlying asset classification

Interest-bearing stablecoin deposit

b. List of all underlying assets

agEUR and EUROC.

As of today, the basket breakdown (Liquidity + %) is the following:

• agEUR 6.8m 73.57%
• EUROC 2.4m 26.42%

c. What mechanisms does it use to maintain stability?

agEUR is an ERC20 token backed by reserves composed of USDC, DAI, FRAX, LUSD, WETH, and WBTC on the Ethereum mainnet. It can be minted and burnt at a 1:1 rate from USDC, DAI and FRAX.

The protocol hedges itself against the EUR/USD change risk by issuing perpetual futures, and through agents called Standards Liquidity Providers, which deposit collateral in the protocol. agEUR can also be borrowed (similar to Dai) in an over-collateralized way through a borrowing module available.

EUROC is a centralized Euro-pegged stablecoin issued by Circle that can be bought at a 1:1 rate with fiat Euro currency. Its peg is hence supported by the reserves held by its issuer.

Both agEUR and EUROC have consistently maintained a tight peg.

The abovementioned conservative designs of both agEUR and EUROC limit exposure to market turmoil and provide strong protections against depeg risks

d. If it's not a stablecoin, what drives the underlying asset(s) price?

N/A

3.Yield source(s) according to each underlying asset.

*a.Organic (e.g. lending, borrowing, underwriting risk).*Trading fees from the agEUR-EUROC pool

1. Boosted Curve gauge rewards
2. Convex rewards

b.Emissions.

1. Sell and reinvest agEUR
2. Sell and reinvest EUROC

c.Inflation.

1. N/A

4. Enumerated underlying asset(s) liquidity.

1. agEUR: agEUR analytics
2. EUROC: Redeemable reserves overview

5. Can the asset(s) protocol economics be modified?

a. What economic protocol parameters can be modified?

1. Yearn Finance Take rate
2. Similar to other Curve pools, the parameters affecting the pool that can be modified are fees and the amplification parameter following a full Curve DAO vote. Rewards can also be modified.

b. What are the requirements to change protocol parameters?

1. A Yearn Finance governance vote or a Curve DAO vote.

6. Asset strategy fixed or flexible.

a. If flexible, who/what is able to modify the strategy?

1. Concerning Yearn Finance: N/A
2. The Curve Finance governance can propose changes affecting contracts, fees level, and potentially new Euro pools can emerge. However, Curve Finance and its rewards system have demonstrated longevity and stability at the scale of the Defi ecosystem.

In addition, the agEUR-EUROC people involve two of the most trusted and most used Euro stablecoins. Both offer a transparent approach to their collateral reserves and functioning (EUROC website, agEUR analytics).

b. List all modification requirements and scenarios.

1. Concerning Yearn: a modified strategy would require a new vault deployment and users migrating funds
2. Stablecoins yield may change due to the above-mentioned reasons.

Proposed Term Duration

The proposed term duration for this new asset would be six months starting from late January, implying an end date around July 31, 2023.

Proposed Code

The Element Core Team has previously onboarded Yearn vaults as eligible assets. We would look to follow the same process previously conducted.

Test Cases

N/A

Security Considerations

For more information on risks associated with Yearn Finance: please visit this page.

For more information on risks associated with Curve Finance: please visit this page.

For more information on the terms of Angle Protocol: please visit this page.

For more information on the terms of Circle's EUROC: please visit this page.

1. List of all directly related protocols to the classified assets above

• Angle protocol
  • Circle
  • Curve Finance
  • Yearn Finance

2. All relevant audit information including a report (if public)

If not public it needs to be acknowledged.

• Yearn audits
• Curve audits
• Angle Protocol Audits
• EUROC public accountants' attestations

3. List any past vulnerabilities or exploits (including stolen funds).

Only Yearn Finance has previously had an exploit and this issue has since been resolved.

4. List any exploits or discovered vulnerabilities by white hat or bounty programs

None

Technical Review Plan or Audit Information

See above

Next Steps (Voting Outcome Summary)

• Discuss this proposal on the Element Finance forum
• Implement a poll on this proposal on Snapshot
• Onboarding and deployment of the Element Finance pool for yvCurve-agEUR-EUROC-f with an initial maturity date set at July 31, 2023