PR with Payload
Proposal by Gyroscope
Summary
- This is a proposal to enable a 10% capped Balancer gauge for a wstETH/cbETH pool on Balancer Ethereum.
- The pool is an Elliptic Concentrated Liquidity Pool (E-CLP). 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, is typically more capital efficient and could thus 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 is 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 has already been launched here.
References/Useful links
Protocol description
- Lido’s wrapped stETH (wstETH) is stETH which is deposited into the stETH wrapper to create a new token called wstETH. stETH is a token that represents staked ether in Lido, combining the value of initial deposit + staking rewards. stETH tokens are minted upon deposit and burned when redeemed. stETH token balances are issued 1:1 to the ethers that are staked by Lido. stETH token’s balances are updated when the oracle reports change in total stake every day. - Lido
- Coinbase Wrapped Staked ETH (cbETH) represents your staked Ethereum (ETH) in a tradable form. You can unwrap cbETH at any time. cbETH provides flexibility to sell, transfer, or use it. You can move cbETH to a personal wallet and trade it outside the Coinbase platform. - Coinbase
- 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 significantly. 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.
- 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).
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 wstETH): 0x72D07D7DcA67b8A406aD1Ec34ce969c90bFEE768
- rateProvider1 (for cbETH): 0x7311E4BB8a72e7B300c5B8BDE4de6CdaA822a5b1
- (allows to control for a price drift from accruing yield by using rate providers to first convert from yield accruing tokens to the underlying)
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
Value
As per “Motivation”. Other Ethereum mainnet pools with these assets 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
wstETH/cbETH E-CLP: 0xF7A826D47c8E02835D94fb0Aa40F0cC9505cb134
gauge on Ethereum mainnet for wstETH/cbETH E-CLP: 0x4D4264aebf65Bb1727bb5438E0b2Aaf86186DA50
Specifcations:
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): 0x4D4264aebf65Bb1727bb5438E0b2Aaf86186DA50
gaugeType(string): Ethereum