[BIP-188] Enable MAI-gDAI-USDC on Arbitrum

PR with payload

Summary:

Enable gauge for gDAI-MAI-USDC on Arbitrum.

Protocol Descriptions:

MAI

MAI is the most crosschain decentralized stablecoin. It is overcollateralized by decentralized collaterals. A detailed list of collaterals and risk profiles can be found here. MAI has been tested and maintained its peg during several market downturns, notably in May 2022.

MAI currently maintains pools on Balancer’s Ethereum and Polygon deployments.

gDAI

gDAI is a receipt token for DAI deposits on Gains Network. DAI is used by gTrade users to perform trading activities. gDAI depositors act as counterparty facilitators to trades on gTrade.

Gains Network is a leading defi platform on both Polygon and Arbitrum. The protocol leads rankings as one of the most profitable in defi.

Motivation:

Gains Network has seen impressive growth since its launch on Arbitrum. Demand for gDAI liquidity is high and so far untapped. For this reason, adding a pool for gDAI is a significant opportunity for Balancer to grow on Arbitrum.

This pool will also represent MAI’s main liquidity hub on Arbitrum. As such, it will take most of the volume related to liquidations and leverage.

Specifications:

Governance: Provide current information on the protocol’s governance structure. Provide links to any admin and/or multisig addresses, and describe the powers afforded to these addresses. If there are plans to change the governance system in the future, please explain.

MAI is controlled by a DAO. More info can be found here: link in reply

There is currently no governance process at Gains Network. A timelock of 2 weeks is in place.

Oracles: Does the protocol rely on external oracles? If so, provide details about the oracles and their implementation in the protocol.

MAI uses Chainlink oracles to price collateral assets.

Audits: Provide links to audit reports and any relevant details about security practices.

MAI: The protocol has been audited twice. Audits can be found here: link in reply

gDAI: Seen the audit for Gains here: link in reply

Centralization vectors: Is there any component of the protocol that has centralization vectors? E.g. if only 1 dev manages the project, that is a centralized vector. If price oracles need to be updated by a bot, that is a centralized vector. If liquidations are done by the protocol, that is also a centralization vector.

MAI: The protocol runs on decentralized systems such as competitive liquidations, and vote-based collateral onboarding. No single person has admin controls over the protocol. The treasury and some part of the protocol are secured by a multisig of doxxed team members.

Gains: The protocol is run in a decentralized way, with changes made to the protocol being secured under a 2-week timelock.

Market History: Has the asset observed severe volatility? In the case of stablecoins, has it depegged? In the case of an unpegged asset, have there been extreme price change events in the past? Provide specific information about the Balancer pool: how long has it been active, TVL, historical volume? You must provide a direct link to the pool AND a link to your pool’s gauge.

MAI is one of the most stable decentralized stablecoins and has remained with the peg range for almost 2 years. Below is a chart of normalized volatility for MAI vs peer stablecoins:

The price of gDAI is largely stable, as the underlying asset is DAI. The price of gDAI fluctuates in correlation to its collateral to debt ratio. This metric and other information related to gDAI can be found here.

The pool in question on this proposal was created recently with the aim of kickstarting liquidity for gDAI and MAI on Arbitrum.

Value: Is this pool intended to be the primary source of liquidity for the token(s)? If this is not the case, explain the expected value add to Balancer (can this pool generate consistent fees?)

This pool will be the main source of liquidity for both gDAI and MAI. It will also be gDAI’s first liquidity pool.

Link to pool: 0x70Ba7DC356B41c849e74c679932c852CC0331a90
Link to gauge: 0x49A0e3334496442A9706E481617724e7E37EAA08

Specification

The DAO Multisig 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will interact with the AuthorizerAdaptor at 0x8F42aDBbA1B16EaAE3BB5754915E0D06059aDd75 and call performAction with the GaugeController at 0xC128468b7Ce63eA702C1f104D55A2566b13D3ABD for the target(address) argument and using 0x3a04f900 followed by the gauge address 0x49A0e3334496442A9706E481617724e7E37EAA08 and the corresponding gauge type for the data(bytes) argument.

data(bytes) : 0x3a04f90000000000000000000000000049a0e3334496442a9706e481617724e7e37eaa080000000000000000000000000000000000000000000000000000000000000004

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Extra links here (max links reached in original post) 1/2

QI token + governance of MAI: Qi Token - Mai Finance
QiDao security audits: Security - Mai Finance

Extra links here (max links reached in original post) 2/2

Gains security audits: https://2065150902-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-MXazyLIr0z2c0oFESmS%2Fuploads%2FEQlitmET1Xcsbr70JsTZ%2FGains_Trade_Smart_Contract_Security_Audit_Report_Halborn_Final.pdf?alt=media&token=cade2f7f-21b7-4b28-9e21-d5874da8aa15

Link to pool: 0x70Ba7DC356B41c849e74c679932c852CC0331a90
Link to gauge: 0x49A0e3334496442A9706E481617724e7E37EAA08

Specification

The DAO Multisig 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will interact with the AuthorizerAdaptor at 0x8F42aDBbA1B16EaAE3BB5754915E0D06059aDd75 and call performAction with the GaugeController at 0xC128468b7Ce63eA702C1f104D55A2566b13D3ABD for the target(address) argument and using 0x3a04f900 followed by the gauge address 0x49A0e3334496442A9706E481617724e7E37EAA08 and the corresponding gauge type for the data(bytes) argument.

data(bytes) : 0x3a04f90000000000000000000000000049a0e3334496442a9706e481617724e7e37eaa080000000000000000000000000000000000000000000000000000000000000004

2 Likes

https://snapshot.org/#/balancer.eth/proposal/0x9b75aa6ca62f7f013bc5273b3fcc973dfd119920a0eee7d9253d84e27a494c97

Gm, brother! I’m passing on a few questions from the Aura delegates:

  1. We were forwarded this Tweet, authored by a researcher active in the Tetu community. Diving into the contracts, these claims do appear to be accurate–hundreds of $MM have been minted and transferred. Has this concern been addressed, and what actions have been taken to remediate this issue?

  2. It seems that you have quite a few vaults already, most of which lack depth of liquidity. Concerns have been expressed that these vaults are being used to establish presence rather than usage. Have you considered deprecating your unused gauges, and replacing them w/ this newer one?

I want to respond in regards to point 2: Qi DAO has been Balancers partner for a long time - even before Aura existed. They incentivized BAL Vaults on Polygon and had some very interesting strategies integrated with Balancer for a long time. I don’t want to jeopardize this partnership and will be in support of this gauge - in the end the bribing market and veBAL holders know best what they want and what doesn’t work.

1 Like

Thanks for chiming in, brother. You opinion is well received, as always. We’ll be sure to take it into consideration.

The recent rash of new gauge proposals coming in has had quite a chilling effect on governance on our side. Voter discussion and participation has been noticeably muted these last few weeks. We’ve also been unable to adequately engage w/ teams before BIPs go to vote, resulting in unfortunate surprises from time to time. The general position of the delegates going forward is that gauge proposals should be meaningful, and approved gauges should be used. If additional gauges are requested, then it seems reasonable for activity on older gauges to be taken into consideration.

2 Likes

Hey franklin, we appreciate the feedback. We value our relationship with Balancer considerably and would like to continue our work together into the future of finance. We hope that the information below can provide you with the context you were looking for.

Our relationship with Balancer is a very long one, pre-dating the bribing ecosystem we see today. This special partnership has yielded benefits to both sides. We have supported Balancer and its friendly forks on launches on all chains where Balancer exists via incentives and collateral integrations. QiDao has a collaboration-maxi approach, which is why MAI has been integrated into the majority of DeFi platforms, including those that are notoriously difficult to be accepted into. We hope to continue this valuable relationship as we build together.

Brief context on CDP stablecoins.

The industry standard for CDP stablecoins has developed as follows: collateral-specific contracts are seeded with stablecoin liquidity in order to then be “minted” via the collateralization process. Stablecoins come from being minted directly by teams in a process that’s widely referred to as debt ceiling increases. This requires protocols to retain the power to mint their stablecoins.

QiDao’s handling of MAI

Throughout the existence of MAI (almost two years now), the protocol has continually decentralized as new infrastructure has allowed for it. Being able to mint MAI tokens has been essential to QiDao, primarily for bridging and increasing debt ceilings (explained above).

Bridging

QiDao pioneered what is now referred to as canonical bridging. In this kind of crosschain transfer, the protocol (in this case QiDao) retains the power to mint its tokens on all chains. Bridges can only lock tokens on the home chain and mint their own version of the token in the target chain. They must then exchange their bridgeMAI with canonicalMAI. This process happens in swap contracts that are seeded with a limited amount of MAI, in order to reduce the downside risk of bridge exploits.

Given how much bridging has changed and will continue to change, it is important for QiDao to remain flexible. No other decentralized stablecoin can claim the level of crosschain ubiquity that MAI has achieved. This comes at the cost of adapting to the realities of our nascent industry.

Decentralization efforts

Our decentralization strategy has continued to be a priority for QiDao. The protocol was very early in the multichain world, and so flexibility has been extremely important in allowing the protocol to build. The strategy has been a mix of using trusted tooling and allowing the protocol to be a key innovator in the space.

The few functions that are upgradable in the system are controlled via a multisig of doxxed individuals. These functions are limited to:

  • interest rates (set to 0)
  • collateral to debt ratios
  • Repayment fee
  • collaterals accepted
  • oracles (powered by Chainlink)
  • Collect revenue
  • Liquidation parameters
  • Reducing and increasing debt ceilings
  • Adding and removing liquidity from canonical bridges

As QiDao continues to establish its operating systems, more individuals will be added to these multisigs. The idea is that each chain will have a different set of signers, all individuals with a stake in that ecosystem and a reputation for ethical decisions.

Another aspect of our decentralization journey are timelocks, which we have begun to implement in late 2022. These timelocks serve to add an extra layer of security, where delayed execution does not present a threat to the protocol. These include certain functions on vault contracts like risk parameters. Another aspect of the protocol that is scheduled for timelocks is the minting of MAI.

Decentralization and security

More initiatives are planned for the further decentralization of the operations at QiDao, which will come as infrastructure in the space continues to improve. We’ve seen in the past year the risks of running a stablecoin protocol. Many protocols were not created with flexibility in mind, and so they have either suffered exploits or have been left behind by a wave of innovation. Our goal is to have balance.

We definitely don’t share the characterization that our engagements with Balancer are for marketing purposes. MAI’s main liquidity pool on Ethereum is on Balancer and is supported by bribes for Aura, which were scheduled to increase. That pool is essential to the functioning of MAI and QiDao on Ethereum.

We’re open to closing some gauges if that helps. For example, the gauge on Polygon and Optimism.

On Arbitrum, we managed to get together Gains Network and QiDao to allow Balancer the chance at being the main liquidity sink for both gDAI and MAI on Arbitrum. This move would have brought plenty of volume and eyes to Balancer. It cannot be understated what a good deal this would have been for Balancer.

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Thanks for your detailed response, brother. I’ll pass it on to the delegates.