[BIP-155] Enable agEUR-jEUR Stable Pool Gauge with a 2% cap (Polygon)

BAL Gauges
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Summary:

Enable a Balancer gauge for the Polygon jEUR - agEUR stable pool, coined 2eur (agEUR).

agEUR and jEUR are both crypto-backed Euros stablecoins. agEUR is issued by Angle Protocol and jEUR by Jarvis Network.

Angle Protocol and Jarvis Network co-write the proposal and already have a history of incentivizing together a 4eur and a 2eur (agEUR) pools on Curve for more than a year. Angle and Jarvis want to migrate the 2eur (agEUR) pool from Curve to Balancer.

References/Useful links:

Jarvis Network:

Link to:

Angle Protocol:

Link to:

Protocol Description:

Jarvis Network

Jarvis Network is an ecosystem of protocols and applications to bring decentralized finance to real use cases. Its first protocol, Synthereum, allows borrowing and exchanging synthetic fiat currencies (jFIATs) on multiple EVM-compatible networks.

The Synthereum protocol has four modules:

  • Liquidity Pools: exchange jFIATs back and forth for USD-stablecoins or other jFIATs without price impact at the Chainlink price feed.
  • Credit Lines: borrow jFIATs against various collateral types.
  • Wrappers: convert non-USD stablecoins for their jFIATs equivalent at a 1:1 ratio.
  • Printers: mint uncollateralized jFIATs for flash loans, seeding money markets, or liquidity pools.

Most jFIATs have a direct fiat on and off-ramp (Mt Pelerin, Suarmi) or indirect (Monerium, Paytrie, Transfero etc.), can be lent or borrowed on money markets (Aave, Midas, 0VIX), can be used for on-chain and off-chain payment (Request, Superfluid, Mt Pelerin) or for earning yield (Beefy, Dotdot, etc.).

Angle Protocol

Angle is a decentralized stablecoin protocol designed to be both over-collateralized and capital-efficient. The protocol has launched agEUR, a Euro stablecoin, which has become one of the biggest decentralized Euro stablecoin. The TVL in the Angle Protocol is $46m with 30m agEUR in circulation.

There are different mechanisms (also called modules) by which agEUR can be issued all having in common that agEUR must be released on the market in an over-collateralized way.

  • In the Core module of the protocol, agEUR can be minted from USDC, DAI and FRAX at oracle value. The protocol insures itself against the $/€ change risk by issuing perpetual futures and by relying on the deposits of another type of agent incentivized by the strategies built by the protocol and by transaction fees. agEUR issued from this means represent the biggest share of the agEUR in circulation, and they are currently over-collateralized at 200%

  • The protocol also has a borrowing module where agEUR can be borrowed against different assets (ETH, wBTC, wstETH) like on Maker. This module is deployed on different chains (including Polygon)

  • The protocol is also engaged in algorithmic market operations (also called direct deposit modules). It has for instance minted agEUR natively on Aave and on Euler. In these cases, agEUR enter in circulation when they are borrowed in an over-collateralized way on the corresponding protocol. Protocol also mints agEUR on the agEUR-EUROC Curve pool when this pool has more EUROC than agEUR (like what FRAX is doing)

agEUR has kept a super tight peg since its launch. It is involved in several other gauges on Curve as well (agEUR-EURs-EURt, agEUR-ibEUR, agEUR-EUROC-cEUR, agEUR-EUROC) which have historically yielded a pretty important volume.

Motivation:

The role of the 2eur (agEUR) pool is to increase the stability of agEUR (1), the on-chain liquidity of both agEUR and jEUR (2), and connect the Angle and Jarvis ecosystems (3). Together, these 3 points allow for building an European DeFi ecosystem.

  1. agEUR peg: on Polygon, agEUR is issued following the CDP model; if agEUR trades below its peg, CDP owner are incentivised to buy agEUR cheaper and repay their debt; if agEUR trades above its peg, CDP owner are incentivised to borrow agEUR and sell them at a higher price; users can also perform a cross-chain arbitrage between Ethereum and Polygon (since on Ethereum one can swap agEUR for USDC at the EURUSD Chainlink price feed without price impact) but since jEUR can be exchanged for USDC, MAI and ETH back and forth at the EURUSD and computed ETH/EUR Chainlink price feed and without price impact on Polygon, arbitrages can be directly performed between the Balancer pool and the Jarvis Liquidity Pool to help maintain the agEUR peg.
  2. On-chain liquidity:
  • agEUR: since jEUR can be exchanged for USDC, MAI and ETH without price impact, then exchanging jEUR, ETH, MAI or USDC for any other token has the same price impact; users can swap agEUR to jEUR and then to USDC, MAI or ETH to access the latter’s liquidity or vice versa. This considerably increases agEUR liquidity.
  • jEUR: jEUR main liquidity source is the Jarvis Liquidity Pool (primary market); without entering too many details, if the pool performs well, it will increase the number of jEUR minted, which will increase the liquidity in our Liquidity Pools and our Wrappers, which is vital to us; also, it is essential to us to have more liquidity sources (secondary markets), and agEUR has a deep liquidity on Polygon, to which jEUR can connect.
  1. Connect ecosystems: the 2eur pool connects Angle and its agEUR liquidity and ecosystem to the jEUR’s, enabling multiple use cases.
  • Credit without FX risk: borrow agEUR or jEUR, swap for jEUR or agEUR then off-ramp jEUR (Monerium, Mt Pelerin, etc.) or agEUR (Mt Pelerin, Monerium, …).
  • Leverage short on EUR/XXX: borrow agEUR or jEUR, swap for jEUR or agEUR, swap for ETH, MAI or USDC, and repeat.
  • DeFi on-ramp and off-ramp: both agEUR and jEUR have a direct fiat on and off-ramp through Mt Pelerin, but it comes with a high fee. jEUR has an indirect 0-fee fiat on and off-ramp through Monerium, so this pool can help users to buy agEUR with Euros or to sell agEUR for Euros.

A few notes:

  • Jarvis LTD has started building positions in BAL, TETU and AURA. The Jarvis Network treasury (governed by the JRT token, which will soon be revamped using the ve-model, a new token called JARVIS, and an 80/20 JARVIS-ETH pool) is planning on building the same positions.
  • Jarvis LTD and the Jarvis Network treasury will both supply liquidity in the Synthereum Liquidity Pool. They will use up to 50% of the fees generated through the Liquidity Pools for vote incentives for veBAL, vlAURA, tetuBAL etc. (we have already done this successfully for a few months now on BNB Chain with Ellipsis / DotDot).
  • With Angle, we have been launching the 2eur (agEUR) pool on Curve. The 2eur pool did a volume of $14M since April 2022, with a TVL of $1-$3M, $6.9M of which were pure arbitrages. It is the most traded 2eur pool among PAR, EURT, EURS and EURe.
  • Moving forward, we will deploy a boosted pool using Midas whenever possible to avoid fragmenting the liquidity between AMM and money markets and earn higher real yield.
  • Finally, we will also deploy a 2eur (agEUR) - bb-am-usd pool or a 2eur (agEUR) - 2eur (agEUR) - 2eur (EURT) - 2eur (EURe) - bb-am-usd pool depending on what would be the best for the liquidity and risk tolerance of LPs.

Specifications:

  1. Governance:
  • Jarvis: no on-chain governance (vote via snapshot) and decisions are executed through a ⅝ multi-sig (only one team member in the signers).
    • Polygon: 0x2709fa6FA31BD336455d4F96DdFC505b3ACA5A68
    • Ethereum: 0x2CA74be68f0A0e053F030D143C1376806BaBEdc9
    • Gnosis Chain: 0xaE1026699f47B1fC572D65E1784b12c3A2574A25
    • BSC: 0x38329F26a075D53324EFd6e5F53869354Fa1cfBc
    • Avalanche: 0x2507A0d8E2aBe9464Ba2d9ddcA38A5ee5e60A434
    • Optimism: 0x40bd131fA9933D592344783E38f0c0F27767d9FA
  • Angle Protocol: Details are specified here, but there is so far no on-chain governance and decisions are executed through a 4/6 multisig and team members cannot take unilateral decisions with the multisig
  • Oracles: jEUR uses EURUSD and computed ETHUSD and EURMAI (ETHUSD / EURUSD and EURUSD * MAIUSD) Chainlink price feed; agEUR uses EURUSD Chainlink price feed.
  1. Audits:
  1. Centralizing vector: jEUR is mainly collateralized by USDC; bridged agEUR is partially collateralized by USDC.
  2. Market history: jEUR has been live since August 2021 (on Polygon); it has never traded off its peg. Same goes for agEUR which has never traded off its peg.
  3. Value:
  • The 2eur pool will act as the main route for arbitrages and the use cases mentioned above (on-chain liquidity, credit without FX risks, etc.).

Contracts

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Multisig Payload PR:

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https://snapshot.org/#/balancer.eth/proposal/0x5250408917235d41e289ae7b07cb54807ee3108b4255d8c083f1267b8bfc8697