- This is a proposal to enable three uncapped Balancer gauges for Ethereum pools that provide liquidity against the Gyroscope stablecoin, GYD, namely:
GYD/ sDAI, GYD/ USDC, GYD/USDT.
- Every one of the pools 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 stablecoins and liquid staking tokens; is typically more capital efficient and could thus generate significant trading volume.
- GYD is an all-weather stablecoin that provides one-stop access to stablecoin risk control. GYD is fully backed by a set of assets with fundamental innovations in risk control built in at the protocol level to automate diversification and redundancy.
- 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. As a Core pool it will be eligible for fee recycling.
GYD is an all-weather stablecoin that provides one-stop access to stablecoin risk control. GYD is fully backed by a set of assets with fundamental innovations in risk control built in at the protocol level to automate diversification and redundancy.
These innovations include automated risk diversification rules, optimized minting and redemption design that guides the protocol on how to use reserve assets to maintain stability, and multiple layers of redundancy in price feeds and circuit breakers.
Note, GYD replaces p-GYD, which is a prototype version of GYD on Polygon that was in testing for ~9 months. - Gyroscope
All Tether tokens (USD₮) are pegged at 1-to-1 with a matching fiat currency and are backed 100% by Tether’s reserves. - Tether
USDC is a digital dollar, also known as a stablecoin, that’s available 24/7 and moves at internet speed. USDC lives natively on the internet, running on many of the world’s most advanced blockchains. Billions of USDC change hands every day1, and every digital dollar of USDC is always redeemable 1:1 for US dollars. - Circle
Dai is a stable, decentralized currency that does not discriminate. Any individual or business can realize the advantages of digital money. - MakerDAO
sDAI is a tokenized wrapper, passing on the DSR. - MakerDAO
The capital efficiency of E-CLPs will help to quickly bootstrap a liquidity network for GYD. This hub-and-spoke network will enable a liquid secondary market for GYD to make it easier to exit from/ enter into GYD.
By using E-CLPs a comparably small amount of initial capital can provide a disproportionately deep market for GYD. 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.
Several E-CLPs have already been deployed to provide custom tailored liquidity profiles for LSTs and stablecoins. For an overview of previously deployed E-CLPs consult: https://dune.com/gyro_finance/gyroscope-e-clps
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.
- rateProvider0 (for GYD): 0x00
- rateProvider1 (for sDAI): 0xc7177B6E18c1Abd725F5b75792e5F7A3bA5DBC2c
- (allows to control for a price drift from accruing yield by using rate providers to first convert from yield accruing tokens to the underlying)
GYD/ USDC: no rate providers are used
GYD/USDT: no rate providers are used
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.
No centralization vectors. The FTL Labs team’s multi-sig can - currently - pause the pool, change the swap fee and set the protocol fee.
The Gyroscope Protocol is in limited production live on Polygon, with an imminent launch on Ethereum mainnet. Also see contracts.
As per “Motivation”. Balancer can become the central trading venue for a new stablecoin that is already tightly interlinked with Balancer. By leveraging asymmetric concentrated liquidity for these assets GYD liquidity can quickly be bootstrapped and become a substantial driver of trading volume and total value locked.
The Balancer Maxi LM Multisig eth:
0xc38c5f97B34E175FFd35407fc91a937300E33860 will interact with the GaugeAdderv4 at
0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd and call the addGauge function 3 times with the following arguments: