Zunami DAO Vote Id: 14 - Add hyUSD/eUSD Strategy

The Zunami Team is excited to announce that the vote is now open to add Convex - hyUSD/eUSD as a new protocol strategy. A proposal has been submitted to the DAO for review and approval, along with the transfer of funds.

Protocol Description: The Reserve Protocol is a decentralized stablecoin project that aims to create a stable and decentralized cryptocurrency. It achieves this objective through a combination of collateralized assets, algorithmic stabilization mechanisms, and an autonomous decentralized governance system. The protocol enables the creation of stablecoins backed by baskets of ERC20 tokens on the Ethereum blockchain.

Stablecoin Description: hyUSD is a dollar-denominated flatcoin issued by the hyUSD community (part of the greater Reserve community) using the Reserve Protocol’s factory contracts. The Reserve Protocol serves as the foundation for creating and managing hyUSD collateral, enabling its stability and consistent growth. hyUSD is a yield-bearing, automatically compounding asset, targeting an 8% growth rate.

Custody Risk: The Reserve Protocol is governed by an on-chain DAO that relies on the votes of RSR token stakers. There are no multi-sigs or other entities that can access underlying funds.

Smart Contract Risk: The Reserve Protocol has undergone comprehensive security audits conducted by prominent firms such as Trails of Bits, Solidified, Ackee, and others https://reserve.org/protocol/security/?search=audita#s-result Additionally, they have initiated a bug bounty program offering a reward of $5,000,000 for identifying vulnerabilities. https://immunefi.com/bounty/reserve/ An independent security review of the Reserve Protocol was conducted by Curve’s Llama Risk team, with favorable results. https://cryptorisks.substack.com/p/asset-risk-assessment-reserve-protocol

Depeg Risk: To mitigate the risk of depegging, the Reserve Protocol utilizes autonomous recapitalization. If the value of a collateral asset declines, it is automatically auctioned off and replaced with pre-configured emergency collateral which has not defaulted. Furthermore, hyUSD benefits from overcollateralization provided by RSR stakeholders, representing 11% of its value, should any shortfall be experienced by underlying protocols.

Collateral Risk: hyUSD is fully collateralized by the following assets and deployed as liquidity on the following protocols to earn its underlying yield: USDC & DAI (Flux) MIM/3CRV (Abracadabra + Convex) eUSD/FRAXBP (Reserve + Convex)

Risk of Stop Incentivization: The Reserve Protocol holds 973,000 CVX tokens, which are used for voting on incentivizing Curve liquidity/rewards. Reserve has additionally announced a $20M investment in the Curve ecosystem, quadrupling Reserve’s current vote weight. https://blog.reserve.org/reserves-defi-investment-f9169869c72f