[BIP-400] Enable WMATIC/MaticX Gauge w/ 10% cap [Polygon]

BAL Gauges
1

PR with Payload

Gyroscope <> Stader Labs Proposal for a 10% capped MaticX gauge

Summary

  • This is a proposal to enable a 10% capped Balancer gauge for a WMATIC/MATICX pool on Balancer Polygon.

  • The pool is an Elliptic Concentrated Liquidity Pool (E-CLP) that is 65% more capital efficient than the largest, existing MATICX pool on Balancer. E-CLPs are custom pools from Gyroscope built on top of Balancer’s pool architecture. They enable trading along the curve of an ellipse. This pool type is ideally suited for liquid staking tokens and it could generate significant trading volume.

  • The pool shall be a ‘Core’ pool with a swap fee of 1 basis points, i.e., 0.01% at pool inception. The fee split has been changed to be now as follows: 50% of all collected fees will go to liquidity providers, while the remaining 50% will go towards Balancer. At pool inception, no fees will go towards Gyroscope.

  • The pool is already live. A dashboard visualizing the past performance is here. Instead of adding direct SD incentives, Stader now wishes to tap into Balancer veBAL tokenomics and bribe for veBAL votes.

References/Useful links

Protocol description

  • MATICX is a token that represents your share of the total MATIC pool deposited with Stader. As soon as you deposit MATIC on the Stader smart contract, you receive newly minted MATICX, based on the exchange rate at the time of staking. - Stader
  • wMATIC is a wrapped version of MATIC
  • The E-CLP uses an internal conversion to avoid a unit drift of yield-accruing tokens.

Motivation

  • We expect the E-CLP to improve capital efficiency by ˜65% compared to the largest, existing StableSwap pool with an amplification factor of 1000. The E-CLP’s efficiency gains are possible due to:

  • Customizable liquidity profiles: Using the curve of an ellipse enables highly customizable liquidity profiles. E-CLPs can be calibrated to approximate most trading curves that would be desired. E-CLP curves can be tailored to have certain regions of low price impact and other regions of high price impact.

  • Price bounds: The E-CLP concentrates liquidity within price-bounds that enable the E-CLP to be highly capital-efficient. Functionally, this works by enabling arbitrary truncation of liquidity profiles from a given trading curve. In effect, the capital efficiency comes from bounding the trading curve to an expected trading range of the assets.

  • The E-CLP’s efficiency gains are illustrated by the recently deployed stMATIC/wMATIC E-CLP. The below box plot shows stMATIC/wMATIC liquidity utilisation. The stacked area chart shows how the E-CLP already reached up to 55% of the total market share of stMATIC on Polygon soon after inception, with only a fraction of total TVL. Note, the below charts are for stMATIC, not MaticX and are purely demonstrating that E-CLPs in general perform well. For MaticX specific information refer to the linked Dune dashboard.

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  • E-CLPs have been developed for stablecoin pools that include the upcoming Gyroscope stablecoin, GYD. However, they can find broader application, whenever the expected trading range of the included assets can be informed by external business logic (e.g. from arbitrage loops of mints/ redemptions in the case of LSTs).

  • This pool will be launched in cooperation with Stader Labs. Stader will - initally - provide incentives to this pool.

Specifications

  • Governance

The Gyroscope Protocol is in limited production live on Polygon. The Gyroscope Protocol will be governed by a DAO and relevant stakeholder with the full launch on Ethereum. For now, the FTL Labs multi-sig can pause the pool, change the swap fee and set the protocol fee. As a custom pool by Gyroscope, the E-CLP will be controlled by Gyroscope governance upon its launch.

  • Oracles

rateProvider0 (for WMATIC): 0x0 (none)

rateProvider1 (for MATICX): 0xeE652bbF72689AA59F0B8F981c9c90e2A8Af8d8f

(MATIC per MATICx conversion rate)

  • Audits

Audit reports by Nethermind, Trail of Bits, and Runtime Verification can be accessed here (the E-CLP is called the “CEMM” in these reports). In addition, the E-CLP code has been live in production on Polygon since November 2022.

  • Centralization vectors

No centralization vectors. The FTL Labs team’s multi-sig can - currently - pause the pool, change the swap fee and set the protocol fee.

  • Market History

Links to the new pool and gauge.

  • Value

As per “Motivation”. Other Polygon pools with LSTs exist, but none of them feature asymmetrically concentrated liquidity. Asymmetric concentrated liquidity for these assets could become a substantial driver of trading volume and total value locked.

Contracts

Specification:

The Balancer Maxi LM Multisig eth:0xc38c5f97B34E175FFd35407fc91a937300E33860 will interact with the GaugeAdderv4 at 0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd and call the addGauge function with the following arguments:
gauge(address): 0x82bcaD0C8F51D88ec339141F0d8953Bc25cc3d8c
gaugeType(string): Polygon

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https://snapshot.org/#/balancer.eth/proposal/0x66a812f99c04d18e5cab5ba586949dc183e5ad899dfc008f31eda32da31ca174