[BIP-490] Enable 80OETH-20WETH Gauge [Ethereum] with a 2% emission cap

BAL Gauges
1

PR with Payload

Summary:

We propose the introduction of a gauge for the OETH/WETH pool on Ethereum. This initiative aims to foster greater liquidity and facilitate smoother transactions for users. By enabling this gauge, we anticipate enhancing the yield-generating opportunities for both the Balancer community and Origin Ether users. Origin has already brought over 8,443 rETH and ETH to the Balancer ecosystem and this gauge will encourage Origin to bring more.

References/Useful links:

• Website: https://oeth.com
• Documentation: https://docs.oeth.com
• Github: https://github.com/originprotocol

• Communities:

Protocol Description:

Origin Ether was launched in May 2023 and is an ERC20 LST aggregator that generates yield while sitting in your wallet by tapping into blue-chip protocols. OETH is backed 1:1 by ETH, WETH, stETH, rETH, and frxETH at all times; holders can go in and out of OETH as they please. Similar to stETH, OETH yield is automatically distributed at least once a day through a positive rebase in the form of additional OETH, proportional to the amount of OETH held.

OETH yield comes from a combination of:

  1. Deploying collateral across various DeFi strategies including Balancer pools
  2. LST validator rewards
  3. A 50bip exit fee is charged to those who choose to exit OETH via the vault contract (completely avoidable if using a DEX), this fee goes back to OETH holders
  4. By default, OETH sitting in smart contracts does not rebase, instead the interest generated from those tokens is provided to those that can rebase

These 4 yield generating functions combined enable OETH to generate higher yields than holding any single LST or farming ETH manually. The current collateral allocation and yield strategies can be seen on-chain at all times via the OETH analytics page. More information on OETH and its mechanics can be found in the OETH docs.

Motivation:

The Balancer team has deployed the new OETH pool for us, 80OETH/20WETH, and 50 ETH of liquidity has already been deposited. We chose to use an 80/20 pool since Origin is the largest LP and we are holding most of our capital in OETH.

Up to a $13M deposit into the rETH Balancer pool has already passed ratification in the Origin DAO and has been allocated to the OETH Balancer strategy - a total deposit of 8,436.84 ETH, now worth over $17M. Two additional Balancer strategies have also already passed ratification in the DAO.

Origin has spent over $8.5M on incentives in the Curve/Convex ecosystem and would like to similarly provide incentives to liquidity providers on Balancer. Origin’s Treasury is also holding several million dollars worth of CVX. Origin’s Treasury team is currently evaluating whether or not to make a similar investment in the Balancer ecosystem.

Specifications:

  1. Governance: Origin Ether is governed by veOGV holders with any upgrades to the contracts being delayed by a 48-hour timelock. More details can be found at Governance and in the governance section of the OETH docs.

  2. Oracles: OETH is using Chainlink oracles for pricing data for rETH and stETH, and a dual oracle for frxETH that combines two sources: the Curve frxETH/ETH EMA oracle and the Uniswap frxETH/FRAX TWAP oracle. Please see the oracle section of the OETH docs for more information.

  3. Audits: OETH was built reusing 95% of the OUSD codebase, of which 10+ audits have been done since 2020. There have also been several OETH-specific audits. All audits can be seen in the audits section of the OETH docs. OpenZeppelin is now on retainer to review 100% of OETH smart contract changes.

  4. Centralization vectors: With limited functionality, the Strategists are tasked with rebalancing collateral between strategies or pausing deposits. However, a 48-hour timelock enforces a wait period before any changes to the OETH contracts can be executed. The timelock is the owner of our ERC-20, Vault, and Strategies contracts. OETH currently accepts LSTs issued by Lido, RocketPool, and Frax which each have their own centralization risks.

  5. Market History: OETH currently has millions in total liquidity across Curve, Uniswap, and Maverick.

  1. Value: The OETH/WETH pool is intended to be a core OETH liquidity pool. Origin has already allocated a portion of its incentives budget to bribe this pool, and Balancer will benefit by attracting additional OETH liquidity.

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): 0x1c9E55ae29541F2D29cDf83a38F53e1143Db278E
  • gaugeType(string): Ethereum
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Great to see OETH arrive on Balancer!

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https://snapshot.org/#/balancer.eth/proposal/0xa04a9b7fc0b37a54943ab48ebbf906aca5c3acfb1fd05e1b08118fe637deed5c

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