Introducing the Basepool: a proposed partnership between @MakerDAO and @CurveFinance that offers unrivaled capital efficiency for stablecoin liquidity pools
The core of the proposal is a new Curve stableswap pool, consisting of $DAI, @circlepay $USDC, @PaxosGlobal $USDP, and @Gemini $GUSD
This provides a variety of fiat on<>off ramp options for users, along with linkage to the DAI credit system and vaults
By including only minimum risk stablecoins within the pool, it should be possible to build up substantial liquidity from risk averse investors
🦺 Lower risk = higher risk adjusted return 📈
MakerDAO already assigns an effective 0% risk premium against these stablecoins and integrates with each through PSMs
This enables Maker to onboard the Basepool LP as collateral with 50x leverage and borrowing costs as low as 0%, significantly boosting liquidity and LP returns
Each $1 billion in pool LP would require only $20 million in initial user equity, while users would also see up to 50x the standard pool return
Curve TVL and LP returns go brrrr
The Basepool could serve as a pair asset for other stablecoin metapools including $FEI, $FRAX, $DOLA, $MIM, and others
The low risk of exposure to Basepool LP should flow through to lower cost of capital for these stablecoin issuers to maintain deep liquidity
Maker would also consider collateral onboarding for metapool LPs paired against the Basepool, with maximum leverage and borrowing costs determined on a case by case basis depending on risk
This should further increase these projects' liquidity and reduce their cost of capital
Version A of the proposal would set up the Basepool with unique parameters:
- 0.009% to 0.01% swap fee
- 20% admin fee
- no CRV incentives
This could maximize Curve's net earnings (admin fees - incentives) and share of stablecoin volume, while keeping LP returns attractive
Metapools paired with the Basepool would continue to use the standard fee rates (0.04% swaps / 50% admin) and apply for CRV gauge support and allocations through CurveDAO governance process
But the Basepool itself would not divert CRV incentives away from existing pools
Version B of the proposal would more deeply integrate MakerDAO as a core member of the CurveDAO governance community
The Basepool would maintain standard admin fee rate of 50% and apply for CRV gauge support
Rather than seeking risk compensation stability fees on Basepool and metapool LP vaults, Maker would withhold a share of CRV earned by LPs
Over time, this would be accumulated into a long term reserve of CRV, giving Maker a greater incentive alignment with the Curve ecosystem
Maker would seek whitelisting to be able to max lock all accumulated CRV into veCRV
Gauge voting would focus on boosting the Basepool and linked metapools, while DAO voting would seek to support Curve's long term value accrual and sustainability
As a final piece of the puzzle, Maker would release a liquid CRV wrapper (mkrCRV) and linked vault
Maker would gain additional voting influence, and CRV holders would be able to unlock value from their holdings while continuing to earn yield from admin fees and Maker vault LPs
While this would create a new competitor in the battle for Curve influence (currently dominated by @ConvexFinance, @iearnfinance, @fraxfinance, and @StakeDAOHQ), I believe this would also create significant opportunities for collaboration
For example, these DAOs could build yielding strategies/wrappers on top of Maker's Basepool and metapool LP vaults
This would automate position management and reduce gas costs for users while giving these protocols an additional source of management or prop investing revenue
Curve is a foundational piece of the Defi stack, and has played a key role in Maker's success over the past 2 years
The relationship between Curve and Maker stretches back all the way to 2019, before the launch of Curve protocol or multi collateral DAI forum.makerdao.com/t/introducing-…
I'm excited at the prospect of deepening collaboration between these two ecosystems
I'll be seeking feedback on the proposal version from both communities, with an intention to launch formal proposal and begin moving this partnership forward in the coming weeks
Thanks for reading, and I'd really appreciate any feedback on the draft proposals!
Defi is strongest when we work together toward common goals 🤝
terra vcs are really between a rock and a hard place. when ponzis collapse, receivers typically claw back investment gains from earlier participants. so their own funds’ solvency depends on them boosting and defending broken mechanisms and nasty ppl like unstablekwon
big ooof
now imagine the cluelessness or just utter nihilism required to be a late joiner like those in the recent lfg round
there are _a lot_ of vcs invested in terra (at this point probably easier to list majors that haven’t invested). could cause an almost total wipeout on vc sector. get your popcorn ready frens
Anchor's handling of bAsset rewards creates perverse incentives which increase risk to depositors
1/206
bAssets are tokens corresponding to liquid staking positions (currently LUNA and ETH are supported)
rewards earned on bAssets are handled at the application layer, so apps supporting bLUNA and bETH can capture these rewards as an incentive for integration
2/
Anchor uses the bETH and bLUNA rewards earned on collateral deposits to help subsidize deposit rates
compared with @MakerDAO's wstETH vault, where vault owners earn this yield, Anchor's mechanism encourages lower collateralization ratios and increases liquidation risk
3/