(p18) Curve pool for jEUR

By jeanbrasse.eth

Since the launch of Jarvis with Synthereum on Polygon, a liquidity mining program has been launched on KyberDMM the October 6th. In addition, a launchpool has been made on Beefy as well as a boost on Harvest for liquidity providers.

However I think it is time to push the incentives further than a simple liquidity mining or boost program. My proposal will focus on the $jEUR token in particular.

The proposal has the goal of creating a 100% EUR pool on Curve including the $jEUR and incentivize with bribes on Votium to have rewards in $CRV.

1. Factory Pool

To start, I propose to base us on Curve.

Curve is the biggest DEX in terms of TVL, it allows stablecoins to be swapped between each other with as little slippage as possible. Curve has recently launched factory pools on Polygon, allowing anyone to create their own liquidity pool to be able to swap between tokens with very little slippage.

The first step of the new incentive system that I propose would be to create a 100% EURO pool on Polygon.

But a question appears: Which token to put in this pool ? You should know that factory pools are limited to 4 tokens. First of all we will include the $jEUR, but I have also selected 3 other tokens:

  • $PAR (mimo capital)
  • $EURS (Stasis)
  • $EURT (Tether)

A first vote will have to be done to determine which tokens will be included in the pool.

In my opinion, all 4 tokens should be included in the pool, allowing users to choose the stablecoin they want, this would lead to more volumes, thus higher rewards for LPs, thus potentially more minted jEUR. In addition, if the $PAR is included in the factory pool, this would allow for new incentives on the pool (see step 2)

There was recently a problem with the $PAR peg being lost due to an exploit, this peg has been recovered. Including the $PAR would also help it keep its peg.

2. Incentives on pool to grow TVL

Once the vote to determine the tokens to be included in the factory pool is over, we can’t go directly to step 3 without the risk of being denied this step by Curve governance.

Indeed, after many discussions with contributors to DAOs, it seems to me preferable that the pool already has a certain TVL (say $1 million minimum) before launching a vote on Curve’s governance to have a gauge (see step 4 and 5).

For that I propose to incentivize the pool directly on polygon.curve.fi (seen with the Curve core team) by creating a $AUR token.

After discussing with the Mimo team, we agreed that the $MIMO token could be included in the $AUR token. I also propose to include the $JRT and $UMA.

In parallel I also analyzed the liquidity mining done on KyberDMM. I concluded that in order to guarantee $1M of TVL on the pool it would be necessary to incentivize the pool with $1500/day. Moreover, to have the best chance to have a gauge (see step 4), I propose to incentivize the pool for 45 days, that is to say for 70 000$ of incentives.

Knowing that there will be 3 tokens in the $AUR, one of them will not come from Jarvis treasury but from Mimo, this would amount to about $47,000 for Jarvis treasury.

3. Pool integrations

At the same time as deploying the pool on Curve and launching the incentives, we can contact other protocols to integrate the factory pool into their protocol.

Many solutions exist:

  • Have the factory pool included by the DEXes aggregators: Paraswap, 1inch, Matcha, Slingshot
  • Make vault requests on yield optimizers: Beefy, Adamant, Pickle, Harvest, etc…
  • Use LP token (from Curve, or Beefy, or StakeDAO) as collateral for mint MAI (QiDAO) and/or on market.xyz to borrow MAI, or jEUR, etc.

4. Gauge Vote on Curve

When the TVL reaches 1 million dollars, I propose to make a proposal on the Curve DAO to have a gauge on the factory pool.

But what does a gauge allow ? A gauge is a system set up by Curve that allows a pool to be eligible for $CRV rewards from the issuance of new $CRV. The amount of $CRV allocated to a pool varies each week depending on the number of $veCRV ($CRV locks) that have voted for that pool, these are called gauges weight.

This is the only place that does not depend on the Jarvis DAO and could be a problem if the proposal is rejected during the Curve vote.

5. Bribe the pool

Now comes the most interesting part of this proposal !

The ultimate goal of having a 100% EUR pool is not only to have 100% EUR exposure while earning interest on it, but also to increase the TVL of Jarvis (and thus the fees collected by the protocol).

To increase the TVL of the factory pool, we need rewards. This is what the gauges on Curve allow, as explained above.

But the question is : How to attract $veCRV holders to vote for the pool ? Simply by buying their vote, what we call bribes.

There are various ways to buy votes but the most profitable way for Jarvis is by using Votium. Votium allows people who have locked $CVX, and therefore own $vlCVX, to vote weekly on the Curve governance weight gauges.

In effect, each $CVX controls the voting power of 6.91 $veCRV (at the time of writing). Projects that want more $CRV rewards will decide to deposit a certain amount of money on Votium that rewards $vlCVX holders who go to vote for their pool in the weekly vote.

To give you an idea of the power of bribes, an anonymous person decided to deposit $9k in $MTA on the musd pool the week of October 4-10th.

Here is the result: https://twitter.com/DefiMoon/status/1445566272691847183

Moreover, between October 7th and 11th, the supply of $mUSD went from 27 million to 40 million tokens, representing a growth of 48%.

Data:

To make these bribes we can reward in $jEUR or $JRT or $UMA from the treasury. But Pascal let me know that Polygon is interested in making bribes on the factory pool. In addition, Mimo capital is also interested to bribe the pool (this will only happen if the $PAR is included in the factory pool).

6. Buy $CVX

I think that to quickly launch the pool, the bribes are the most efficient way (well beyond the liquidity mining programs). However, in the mid-term, this will be costly for Jarvis (despite the gains from the bribes).

Including a strategy of buying $CVX and then locking them into $vlCVX to continue to vote on the factory pool after the bribes end would allow them to continue to receive rewards in $CRV while being the most efficient.

It is also more interesting to buy $CVX rather than $CRV, because relative to the price of the 2 tokens the $CVX controls more $veCRV, and therefore voting power, than the $CRV itself.

At the current price:

  • 1 $CVX: $24
  • 1 $CVX controls 6.91 $veCRV: Dune Analytics
  • 6.91 $CRV: $29.57

We can also add that $vlCVX earns rewards that will go directly into Jarvis treasury, about 9% APR excluding extra incentives.

7. Proposal

To resume, the main idea of the proposal can be divided into 2 axes:

1st axe: Creation of the pool and incentives

  1. Create a 100% EURO factory pool on Curve (jEUR, PAR, EURS, EURT)
    => I propose to include the 4 tokens in the factory pool

  2. Incentivize the pool in $AUR on polygon.curve.fi to reach at minimum 1M$ of TVL
    => I propose to incentivize the pool with $70,000 of $AUR token backed by $JRT and $UMA from the treasury and $MIMO from Mimo

  3. Make integrations of the pool on various protocols: Paraswap, 1inch, Slingshot, Harvest, Pickle, Beefy, Adamant

  4. Make a proposal on Curve to get a gauge on the pool (get rewards in $CRV)

  5. Make bribes in $JRT, $jEUR and $UMA on Votium for 10 weeks to get rewards in $CRV token ( 1 vote every 2 weeks on Votium, that is to say 20 weeks of gauges weight on Curve)
    => I propose to put 15k$/week in bribes during 10 weeks. That’s a total of $150,000

2nd axe: Purchase of $CVX

Purchase $CVX during 10 weeks to be able to continue to have rewards in $CRV after the end of the bribes as well as to have power on the governance of Curve (potential partnerships with other protocols due to $CVX)
=> I propose to buy 10k$/week of $CVX during 10 weeks. For a total of 100 000$ worth of $CVX

8. Conclusion

In the long-term, I am targeting a TVL between $10 and $20 million on the factory pool, which would represent a minimum of 2.5 million minted jEUR that will be on the pool. This pool would allow anyone to get exposure to a 100% EURO pool at a low cost.

If we take into consideration the time to put everything in order, I estimate that the bribes on Votium should be finished at the end of January 2022. Knowing also that Mimo and Matic are interested in setting up bribes on the pool, it is possible that the bribes will continue after January 2022.

The purchase of $CVX would also allow the pool to retain voting power while generating interest. (9% APR currently).

Let’s also not forget that the treasury currently has 6582 $CRV, this would also allow the pool to maintain rewards in $CRV after the end of the snippet.

In total I propose to spend $297,000 (from Jarvis treasury only):

  • 197 000$ in incentives:

=> 47 000$ in $JRT et $UMA for the $AUR token

=> 150 000$ in JRT$, $jEUR or $UMA for the bribes (during 10 weeks)

  • 100 000$ to purchase $CVX (during 10 weeks)
6 Likes

Excellent proposal.
Just two question : I understood there was a limit in jEUR minting (like 4 millions at max actually but it will increase with the time).

  1. There is still this limit on the jEUR minting ?
  2. If yes, there is a risk to see a big part of the liquidity be catched by Curve pool and limit the usage/integration of jEUR in the DeFi space ?

Except theses questions, 100% with the proposal.

1 Like

Hey, thanks for your feedback !

Indeed, there is always this limit to the jEUR minting but we will be able to add 1 million $ through different possibilities if the need is felt.

Yes it is possible that a large part of the minted jEUR will go into this pool, this could be a problem in the first weeks of the pool but I think the situation will stabilize and allow a massive use/integration on jEUR in the DEFI space. Let’s not forget that users will still be able to buy jEUR directly on the pool, jEUR deposited on the pool will not be blocked.

Thank you very much for all theses awsers

1 Like

Hi,
I’m writing this message because I would like to submit new incentive amounts on the 4eur pool.

Indeed, Curve has recently updated its documentation about factory pools, you can find it here: Pool Factory - Curve Finance
This new documentation recommends to have a TVL of at least 3 millions $ on the pool to be listed on the mainUI and to be able to ask for a gauge.
This is 3 times more than the $1 million we originally planned.

I also think we should increase the length of the incentive originally planned on the pool as it may allow us to take more time to request the Curve governance gauge. I propose to increase the duration of the incentive from 45 days to 60 days.

With the help of newbieone, I have done some calculations to determine the incentive amount to reach $3 million TVL on the pool. However, we are aiming for a TVL between $4 and $5 million.
The calculations that we made are based on the incentives already in place on KyberDMM. We made these calculations with the objective of having a 40% APR with $3 million TVL during 60 days.
We calculated that in order to have $3 million in TVL for 60 days we would need to spend $3,250 per day on the 4eur pool, resulting in $195,000 in incentives for 60 days. If we calculate the APR over 1 year, this gives 39% APR for $3 million in TVL.

Another way to boost APR is to create a factory pool including the DENARIUS (name of the token backed by $JRT, $UMA and $MIMO) and the 4eur pool on Curve polygon and then to incentivize it as DENARIUS token. Putting incentives on this pool would increase the price of the DEN because people will want to buy the token to earn rewards, thus increasing the APR on the 4eur pool.
Based on the incentives on KyberDMM we calculated that to have a TVL of $200,000 during 60 days with a APR of 90% we would have to spend $500 per day, or a total of $30,000 in incentives on the DEN-4eur pool.

To start the pool we propose that the treasury add $5,000 in DEN tokens and $5,000 in 4eur pool.

This would bring us to $230,000, but after discussions with the Mimo team we agreed that Mimo would pay 50% of the total incentives in $MIMO which would be included in the $DEN token.

We decided to rework the incentives to maximize our chances of getting a gauge in the Curve governance vote as well as to maximize the incentives. This may seem like a lot, but these incentives will take place over 60 days. Knowing also that the treasury receives 1700 $UMA each week, that is to say approximately 100 000$ per week, these incentives would be paid back in 10 days.

Recap of incentives
Total: $230,000 (100 $DEN)

  • Mimo → $115,000 (50 $DEN)
    • 97,500 in $DEN token on pool 4eur
    • 17 500 in $DEN token on the DEN-4eur pool
  • Jarvis → $115,000 (50 $DEN)
    • 97,500 in $DEN token on the 4eur pool
    • 12,500 in $DEN token on the DEN-4eur pool
    • 5,000 in $DEN token to seed the DEN-4eur pool (with $5,000 of 4eur from the treasury)

I have removed the vote currently in progress on snapshot to determine the incentive amount. I will post the vote for this proposal on Thursday night.

If you have any questions don’t hesitate !