Proposal to wind down support for the Fantom Ecosystem

Background

On May 29th, the StargateDAO decided to wind-down support for the anyUDSC asset in the Fantom ecosystem, following the Force Majeure announced by Multichain. On July 15th, StargateDAO voted to support the new safehaven assets issued by LayerZero in the Fantom ecosystem.

Since July 2023, these assets have been supported within the Stargate protocol, averaging around $7M in incentivised TVL, and about $1-5M in 7-day volume for this pool.

On April 4th 2024, the Fantom Foundation announced that they are issuing a new version of a canonical stablecoin, called USDC.e, bridged from Ethereum.

Proposal

The Stargate Foundation is recommending that StargateDAO deprecates support for the lzUSDC pool on Fantom. This pool is currently not generating enough volume to recoup the costs spent on incentives. Further, the safehaven lzUSDC assets provided by LayerZero are likely to be deprecated in their use across Fantom’s DeFi ecosystem, and hence bridging volume will only decrease.

Additionally, removing this pool from the protocol will free up capital allocated on its pathways, increasing the thickness of other pathways within Stargate V1, reducing fees and increasing liquidity on these USDC pathways. This also means Stargate can handle more volume on these pathways.

The DAO should deprecate this pool ahead of Stargate V2 launch, and can revisit the idea of supporting the Fantom ecosystem once there has been meaningful adoption of any new native stablecoin. The asset will continue to be available within the UI until all users have removed their liquidity from the ecosystem.

The DAO should also remove all LP positions from various DEXes across the Fantom ecosystem. It should additionally sell all rewards tokens that it has accumulated over the period for POL to use within the Stargate protocol.

Execution

Upon approval, the lzUSDC pool on Fantom will be disconnected from all over pools, and put into withdrawal only mode. Additionally, users will only be able to bridge in 1 direction: from Fantom -> Ethereum, in order to successfully wind-down the asset. The ability to withdraw will always

Summary

Given the recent announcement from the Fantom Foundation of a new canonical stablecoin, Stargate should wind-down its support for the Fantom ecosystem as the lzUSDC asset is not likely to generate enough volume and revenue through the protocol to justify its maintenance. This should be done ASAP, ahead of Stargate v2 launch.