MIR-37┃Add crvUSD as paUSD collateral on Ethereum

Summary: This proposal aims to add crvUSD as paUSD collateral on Ethereum.

Rationale: The Curve Stablecoin infrastructure empowers users to create crvUSD by utilizing a diverse range of cryptocurrency assets as collateral.

These positions are managed in a passive manner: should the value of the collateral drop, the loan automatically initiates a soft-liquidation process, converting a portion of the collateral into crvUSD. Conversely, if the value of the collateral increases, the system reclaims the collateral by exchanging crvUSD back into the original collateral token.

However, it's important to note that this process may result in some losses due to the soft-liquidations and de-liquidations involved.

Here is the documentation / whitepaper about crvUSD.

Once the vote is accepted on Snapshot, we will determine the associated liquidation ratio, minimal collateral ratio, debt ceiling and liquidation bonus in a second MIR discussion.

Project Presentation:

• Protocol name : Curve USD
• Token requested : crvUSD
• Token contract address : 0xf939E0A03FB07F59A73314E73794Be0E57ac1b4E
• Audit(s) links: mixbytes
• Chain requested : Ethereum
• Relation with the project : none.
• Github: www.github.com/curvefi/curve-stablecoin/blob/master/doc/curve-stablecoin.pdf
• Website: www.curve.fi/
• Twitter : www.twitter.com/CurveFinance
• Discord : www.discord.com/invite/9uEHakc
• Telegram : t.me/curvefi

Token metrics & Risk assessment:

Smart Contract risk: C+ The Curve DAO operates as a fully decentralized organization and the crvUSD has been audited by mixbytes. There is no admin mint function in the Token smart contract, so the team can’t mint token. There are currently 1,2k holders on Ethereum.

Counterparty risk: C+ Curve is one of the leading DeFi projects. The token is available on top exchanges with nearly $730M market cap with a daily volume of 4M$ on Ethereum although a large share of CRV’s supply is locked. There are currently 163k transactions on Ethereum.

Market Risk: B The crvUSD token was introduced by Curve a few months ago, and since its launch, its TVL has increased to approximately $730M. The average daily trading volume is ~$20M (CeFi & DeFi) and the liquidity available on Ethereum is nearly $25M.

Chain Risk : A Ethereum had 0 outages over the last 6 months. (https://etherscan.com/chart/blocks)

Liquidity Risk of paUSD on Ethereum: C- The paUSD/wUSK/USDC pool on Balancer has $245k liquidity composed of 17,8% USDC, 27,67% wUSK and 54,53% paUSD. The paUSD/wUSK pool Uniswap (Bunni) has $17k liquidity.

This provides the following price impact on the following trade sizes:

• 1000 USDC → paUSD: 0.12%
• 10000 USDC → paUSD: 0.29%
• 25000 USDC → paUSD: 0.48%
• 50000 USDC → paUSD: 0.68%

Overall Risk : B The Overall Risk is the average of the points mentioned above.

Means:

• Human resources: Multisig DAO signers will need to sign and execute transactions to add crvUSD as paUSD collateral on Ethereum.
• Treasury resources: There is no cost for the treasury to add crvUSD on Ethereum.

Technical implementation:

• Set the chainlink oracle related to the crvUSD: crvUSD/USD into PriceFeed Contract
• Add crvUSD in the ConfigProvider Contract of paUSD with all parameters decided by the Mimo governance.

Voting options:

• Add crvUSD as paUSD collateral on Ethereum
• Against crvUSD as paUSD collateral on Ethereum
• Abstain

Authors: Starny & Jean Brasse from Mimo Labs