[BIP-405] Enable staBAL3/EURe Gauge [Gnosis]

BAL Gauges
1

PR with Payload

Summary:

Enable a Balancer gauge for the Gnosis Chain staBAL3 / EURe stable pool, with a max cap of 2%.

EURe is a Euro stablecoin backed by Euros and issued by Monerium, and staBAL3 is a CSP composed by USDT/USDC/wxDAI. This pool uses a Chainlink data feed as rate provider for Euro, which enables the utilization of a stable pool despite being two different assets.

A boosted pool like this one was created two months ago and has shown early signs of profitability, even when the Euro appreciated 5% vs the USD in this timeframe, and then came back to just +2%.

References/Useful links:

Monerium:

Link to:

Protocol Description:

Monerium

Monerium is authorised and regulated as an Electronic Money Institution (EMI). Monerium offers services to residents of the European Economic Area, the UK, and Switzerland. Monerium is authorised to issue e-money tokens on blockchains.

Monerium issues the EURe, a Euro stablecoin with a 102% backing. EURe is more than one-to-one backed in high-quality liquid assets and is redeemable on demand. Unlike a bank, an Electronic Money Institution can only safeguard customer funds but not make loans.

Motivation:

EURe is set to become a core piece of the Gnosis Chain ecosystem, and creating deep liquidity for such an asset is crucial. At the moment, Gnosis DAO has been incentivising a Curve v2 pool where there is USD 8M worth of liquidity, but the peg hasn’t performed extremely well, being priced up to -2% vs EUR at some points. Enabling a gauge in Balancer would allow us to make this liquidity more efficient.

As mentioned before, this pool was created two months ago and Gnosis DAO deposited USD 100k for testing purposes. With this amount of liquidity, volume wasn’t very high.

However, a few takes can be made

  • In this two months, EURO has appreciated up to 4.5% when it was priced at $1.1245 and then came back to 1.0928 (all prices were taken from Chainlink oracle)
  • The pool made $216 in fees
  • The P&L of LP vs HODL was $161, meaning that Impermanent Loss was $55.
  • We can expect to have higher volume and fees once more liquidity is deployed.
  • I have taken several snapshots of these values over these two months. At all points, the position was profitable. However, when the pool was imbalanced and EURe was trading below 1 euro, the impermanent loss was larger. Still, at these times, the LP was profitable. These snapshots can be seen here

Specifications:

  1. Governance:
  • Gnosis’ forum here
  • Monerium has no on-chain governance.

  1. Oracles: The pool uses a Chainlink price feed for EURe price.

  2. Audits: N/A

  3. Centralizing vector: Monerium is backed by Euros.

  4. Market history: EURe has been live since May 2022 as Monerium can be minted/redeemed against Euros, it has held its peg even though its low liquidity creates stability issue time to time (always arbed).

  5. Value: The pool can become the main source of liquidity for EURe.

Contracts

Specification:

The Balancer Maxi LM Multisig eth:0xc38c5f97B34E175FFd35407fc91a937300E33860 will interact with the GaugeAdderv4 at 0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cdand call the addGauge function with the following arguments:
gauge(address): 0x399A750516c14C80480AED2Bb597092b9118Caa9
gaugeType(string): Gnosis

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https://snapshot.org/#/balancer.eth/proposal/0xe35fe69148c27893f17cde33d25cf33e130e01f79db53674e2b4b8f9edc71e5f

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