Summary

• This is a proposal to enable two uncapped Balancer gauges for so called "Connector Pools" on Arbitrum. The two connector pools will consist of aUSDC/USDC and aUSDT/USDT.
• Connector Pools are so called "2-CLP" pools that concentrate liquidity within 1bp and feed into Gyroscope's newly launched Rehype Pools. Rehype Pools auto-rehypothecate E-CLP assets to Aave. In order to reduce smart contract complexity, Rehype Pools are an extension of Gyroscope's E-CLPs that relies on order routers to wrap/ unwrap aTokens on Aave.
• Connector Pools are a means to onboarding order routers to Rehype Pools. They reduce gas costs (swap vs (un)wraps on Aave) and require no custom logic from order routers.
• The pool shall have a swap fee of 0.05bp basis points at pool inception. The pools will have no protocol fees at launch in order to limit the amount of incentives needed to bootstrap this pool. Each pool has a TVL target of around 100k USD. Protocol fee strategy focuses on Rehype Pools instead of these small connector pools.

References/Useful links

• Documentation of 2-CLPs
• Documentation of Rehype pools
• Website
• Github
• Discord
• X

Protocol description

• stataArbUSDT is the wrapped, static version of the rebasing Aave lending deposit token for aUSDT on Arbitrum. - Aave
• stataArbUSDCn is the wrapped, static version of the rebasing Aave lending deposit token for aUSDC on Arbitrum. - Aave

Motivation

Rehype pools reach new efficiency heights while staying simple and therefore safer. Rehype pools embrace a simple, modular design that doesn’t introduce new smart contract code for rehypothecation. Rehype pools thus inherit the security record of E-CLPs.

The complexity of Rehype pools is handled in the more flexible layers of order routing and front end interface instead of in smart contracts. At the same time, they keep everything transparent on-chain and keep users in control, in contrast to common rehypothecation in TradFi.

Connector pools faciliate Rehype Pools by making it easier for order routers to support the trade routes of Rehype Pools. It is easier in terms of operational complexity and in terms of lower operational costs (i.e., gas fees).

Specifications

Governance

The Gyroscope Protocol will be governed by a DAO and relevant stakeholder with the full launch on Ethereum. For now, the FTL Labs multi-sig can pause the pool, change the swap fee and set the protocol fee. As a custom pool by Gyroscope, the E-CLP will be controlled by Gyroscope governance upon its launch.

Oracles

• rateProvider0 (for stataArbUSDCn): 0x87cD462A781c0ca843EAB131Bf368328848bB6fD

• rateProvider1 (for stataArbUSDT): 0x48942B49B5bB6f3E1d43c204a3F40a4c5F696ef6

• (allows to control for a price drift from accruing yield by using rate providers to first convert from yield accruing tokens to the underlying)

• Reviews for these rate providers can be verified as SAFE here.

Audits

Audit reports by Nethermind, Trail of Bits, and Runtime Verification for the underlying E-CLP can be accessed here (the E-CLP is called the “CEMM” in these reports). In addition, the E-CLP code has been live in production on Polygon since November 2022. ‘Rehype Pools’ are an extension of E-CLP that supports Aave’s statA tokens and outsources much of the complexity of ‘Boosted Pools’ to order routers.

Centralization vectors

No centralization vectors. The FTL Labs team’s multi-sig can - currently - pause the pool, change the swap fee and set the protocol fee.

Market History

The Gyroscope Protocol is live on Ethereum since EOY23, with E-CLPs on several other chains. Details available here .

Value

As per “Motivation”.

Contracts

• aUSDC/USDC

• Connector Pool: 0xcA8ECD05A289B1FBc2E0eAEC07360c4BFec07B61
• Childchain gauge on Arbitrum: 0xe39fEEB09C4dDE420eAAADd066F949ab84c94bb8
• Arbitrum root gauge on Ethereum: 0x75BA7F8733c154302cbE2e19fe3ec417E0679833

• aUSDT/USDT

• Connector Pool: 0x14ABD18d1FA335E9F630a658a2799B33208763Fa
• Childchain gauge on Arbitrum: 0x1C8D981BBc56B7C65289FE34d7FF692ABDe9c8D5
• Arbitrum root gauge on Ethereum: 0xF937BF168B33D8D10d555e9a039Ec1B8e4c543d1

Specification Transaction: The Balancer Maxi LM Multisig eth:0xc38c5f97B34E175FFd35407fc91a937300E33860 will interact with the GaugeAdderv4 at 0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd and call the addGauge function with the following arguments:

gauge(address): 0x75BA7F8733c154302cbE2e19fe3ec417E0679833 gaugeType(string): Arbitrum

gauge(address): 0xF937BF168B33D8D10d555e9a039Ec1B8e4c543d1 gaugeType(string): Arbitrum