[BIP-15] Enable Two FIAT Stableswap Gauges

Summary:
FIAT DAO is seeking the preliminary approval of veBAL gauges for two yet-to-be-deployed stableswap pools.

  • FIAT-USDC-DAI
  • FIAT-FEI-FRAX

This comes after the successful migration of our governance token $FDT’s liquidity to the Balancer platform over the past month.

References/Useful links:

Protocol Description:
The FIAT protocol is a DeFi-native repo market solution for providing liquidity to holders of fixed income assets. It allows users of apps like Element Finance, Notional Finance, and Yield Protocol to bring their proofs of liquidity to the protocol in order to collateralize a debt position in $FIAT, a stable value asset. Our v1 has just launched, and it’ll look and feel familiar for users who have previously minted DAI, RAI, or MIM. By utilizing proven stablecoin mechanisms, the protocol is able to offer competitive borrowing power to holders of such collateral assets, allowing them to releverage fixed yields or meet current liabilities as the locked assets mature. You can learn more about its primary use case via this thread from Element founder Will Villanueva.

The success of FIAT is predicated on its ability to attract secondary liquidity. In its current iteration, it is pooling secondary liquidity around a singular asset, drawing forward demand for an otherwise fragmented universe of collateral backing. Unique to FIAT versus other CDP implementations is that fixed term collateral forces users to repay back their debt at a known point in time, lest they bear negative yields due to FIAT interest accrual on those positions thereafter - this allows for higher maximum LTVs and potentially more trading fees for LPs. Currently, only stablecoin-denominated collateral is supported by the protocol, so any risk premium is a function of smart contract concerns or changes in prevailing yields.

Motivation:
Over the course of its first month in existence, $FIAT has had its liquidity subsidized on Curve via a discretionary budget. Over the same time, liquidity for our governance token has been ported to Balancer. We’ve been very pleased with the migration and think it makes sense to follow suit with $FIAT here in its early days.

A number of items excite us about the opportunity:

  • The presence of boosted staBAL and now FEI-FRAX-DAI pools will allow for user pathways that involve depositing into either, minting FIAT, and selling FIAT for more of the underlying in order to gain levered fixed exposure. This results in locked TVL for Balancer and higher trading fees for Balancer LPs.

  • With Hidden Hand, it will become possible to have a larger consortium of projects actively subsidize FIAT LPs. We anticipate that all of our collateral partners with associated ERC-20 tokens will see the value in deeper FIAT liquidity for their protocols. And for other stableswap pools that exist on Balancer, deeper FIAT liquidity increases the odds of locked TVL in their pools.

  • The user experience associated with veBAL and Hidden Hand is more clear than our current Curve → Rari Fuse flow.

What we would like to discuss in this thread, however, is the deployment of the stableswap pools themselves. Given the nature of FIAT (i.e. CDP architecture, stablecoin backing, audited collateral issuers), we would be interested to hear what members of the Balancer DAO have to say regarding their comfort with varying levels of potential A coefficients. If you have any specific thoughts regarding this topic, please share your opinion in the thread!

Specifications:

  1. Governance: FIAT DAO is a completely on-chain organization, with no corresponding real world entity in place. The FDT token has been given away for free since November of 2021, and a DAO smart contract architecture has been live since December 2021.

  2. Oracles: $FDT is a standard ERC-20 DeFi governance token that comes with the volatility inherent to the sector. $FIAT is a DAI-like asset that will come to be backed by less liquid derivatives, but at the moment only supports collateral types with existing secondary markets.

  3. Audits: Audits of our protocol and our collateral oracle system can be found in the Security repo within our Github.

  4. Centralization Vectors: $FDT holders determine which assets are supported as collateral and the parameters associated with each. A six of eleven guardian multisig currently holds certain emergency privileges.

  5. Market History: $FIAT has been transferable since April 2022. It previously reached a high watermark of $1.3M deposited on Curve.

11 Likes

Glad to hear the UX of veBAL/Hidden Hand is better than Curve :slight_smile:

I don’t have any strong opinion on potential A coefficients but I think it generally makes sense to start low at 100 or 200. The pool owner can always ramp it up in the future if the peg proves very stable/reliable.

Are there minting limits on FIAT? Might be helpful in understanding risks of using different A coefficients.

1 Like

Both collateral vaults themselves and the protocol itself have debt ceilings. You can view the global debt ceiling by calling function 8 on Codex: Codex | Address 0x6bF5EB06201e4ea7C315b1C23BfE79fAE30541F9 | Etherscan. We’re working on better visualization of the per-vault debt ceilings.

Currently, the global debt ceiling is set to $50M.

3 Likes

We would like to take this to a vote now that the FUD pool is live.

Pool: StablePool | Address 0x178e029173417b1f9c8bc16dcec6f697bc323746 | Etherscan

Gauge: Vyper_contract | Address 0xdd4db3ff8a37fe418db6ff34fc316655528b6bbc | Etherscan

3 Likes

cheers, will include this in the round of votes that go out this week on Thursday

2 Likes

https://snapshot.org/#/balancer.eth/proposal/0x0fc099c6620f603a17159a00c23ceaa090c553614cdc59f2f82a430c173e237c

1 Like