[BIP-503] Enable wFRK/PAR/jEUR Gauge with a 2% cap (Polygon)

BAL Gauges
1

PR with Payload

Summary:

Enable a Balancer gauge for the wFRK/PAR/jEUR (p-cs-kp-eur) pool with a 2% cap on Polygon

wFRK is an erc-4626 wrapper of FRK. FRK is a freely transferable Interest Bearing token backed by French T-bills offering approximately 3,38% APR. The KUMA Protocol accepts to swap regulated NFTs (KUMA NFTs) backed by bonds in exchange of composable interest-bearing tokens (KIBT) based on the metadata of the NFT.

PAR is crypto-backed Euro stablecoin issued by the Parallel Protocol.

jEUR is crypto-backed Euro stablecoin issued by the Jarvis Protocol.

References/Useful links:

Parallel Protocol (prev. Mimo Protocol):

Link to:

KUMA Protocol:

Link to:

Jarvis Network:

Link to:

Protocol Description:

KUMA Protocol

The KUMA Protocol results from the work of two distinct organizations: Mimo Capital AG and the KUMA Protocol.

  • Mimo Capital AG, a Liechtenstein regulated and licensed company, audited by Grant Thornton issues tokens backed by bonds (KUMA NFTs) using NFT technology (underlying bonds are held by Bank Frick & Co. AG) to authorized individuals/companies (KYC/KYB).

  • The KUMA Protocol is a decentralized entity governed by vMIMO token holders that leverages these NFTs and issues KUMA interest-bearing tokens (KIBTs), which are freely transferable erc-20 tokens. These interest-bearing tokens behave similarly to stablecoins whose balance increases automatically.

Currently, 3 KIBTs are deployed on Ethereum, Polygon PoS, Mantle & Linea:

  • FRK, a KUMA Interest-bearing token backed by KUMA NFT, themselves backed by 360 days French T-Bills. (± 3,38% APR)
  • USK, a KUMA Interest-bearing token backed by KUMA NFTs, themselves backed by US 12 months T-Bills. (± 4,5% APR)
  • EGK, a KUMA Interest-bearing token backed by KUMA NFT, themselves backed by 740 days Next.e.GO Mobile SE Corporate Bonds. (± 8,75% APR)

Parallel Protocol

The Parallel Protocol (prev. Mimo Protocol) is a Collateralized Debt Position (CDP) protocol deployed on Ethereum, Polygon and Fantom. Stablecoins (PAR & paUSD) are decentralized (controlled by vMIMO holders), non-custodial, overcollateralized, and fully redeemable synthetic asset pegged to the Euro/USD fiat currency.

Jarvis Network

Jarvis Network is an ecosystem of protocols and applications to bring decentralized finance to real use cases. Its first protocol, Synthereum, allows borrowing and exchanging synthetic fiat currencies (jFIATs) on multiple EVM-compatible networks.

The Synthereum protocol has four modules:

  • Liquidity Pools: exchange jFIATs back and forth for USD-stablecoins or other jFIATs without price impact at the Chainlink price feed.
  • Credit Lines: borrow jFIATs against various collateral types.
  • Wrappers: convert non-USD stablecoins for their jFIATs equivalent at a 1:1 ratio.
  • Printers: mint uncollateralized jFIATs for flash loans, seeding money markets, or liquidity pools.

Most jFIATs have a direct fiat on and off-ramp (Mt Pelerin, Suarmi) or indirect (Monerium, Paytrie, Transfero etc.), can be lent or borrowed on money markets (Aave, 0VIX), can be used for on-chain and off-chain payment (Request, Superfluid, Mt Pelerin) or for earning yield (Beefy).

Motivation:

The role of the p-cs-kp-eur pool is to increase the stability of PAR and wFRK (1), the on-chain liquidity of both PAR and wFRK (2), connect the Parallel and KUMA ecosystems (3) and providing a fiat gateway to PAR & wFRK holders on Polygon PoS (4). Together, these 4 points allow for building a Bonds DeFi ecosystem.

  1. PAR & wFRK peg:
  • PAR is issued following the CDP model; if PAR trades below its peg, CDP owner are incentivised to buy PAR cheaper and repay their debt; if PAR trades above its peg, CDP owner are incentivised to borrow PAR and sell them at a higher price; since wFRK can be exchanged for Bonds NFT, and can be sold for real EURO, arbitrages can be performed between the Balancer pool and EURO market to help maintain the PAR peg; so if PAR trades below or above its peg, anyone can perform an arbitrage without having to go through a CDP.
  • wFRK is an erc-4626 wrapper of FRK. FRK is issued by using the “swap” function on the KUMA Protocol, each FRK are backed by Treasury Bonds NFT, if the peg is below the real price, KYC/KYB people are incentivized to buy FRK and redeem the NFT, if the price is above the peg, NFT holders are incentivized to mint FRK and sell them.
  1. On-chain liquidity:
  • wFRK: Since PAR can be exchanged for jEUR and wFRK which are redeemable for EUR. Users can swap PAR for wFRK and/or jEUR then EUR by buying/selling KUMA NFTs and/or redeem jEUR for EUR to access the latter’s liquidity or vice versa.
  • PAR: since jEUR can be exchanged for USDC, EURe and ETH without price impact, then exchanging jEUR, ETH or USDC for any other token has the same price impact; users can swap PAR to jEUR and then to USDC or ETH to access the latter’s liquidity or vice versa. This considerably increases PAR liquidity.
  • jEUR: jEUR main liquidity source is the Jarvis Liquidity Pool (primary market); without entering too many details, if the pool performs well, it will increase the number of jEUR minted, which will increase the liquidity in our Liquidity Pools and our Wrappers, which is vital to us; also, it is essential to us to have more liquidity sources (secondary markets).
  1. Connect ecosystems:
    The p-cs-kp-eur (wFRK, PAR, jEUR) pool connects Parallel and its PAR (essentially a way to borrow EURO with various collateral) to KUMA and its wFRK (providing onchain FR T-bills), but also Jarvis and jEUR, enabling multiple use cases:
  • Credit without FX risk: borrow PAR, swap for jEUR then off-ramp jEUR (Monerium, Mt Pelerin, etc.).
  • Leverage short on EUR/XXX: borrow PAR, swap for jEUR, redeem for ETH or USDC, and repeat.
  • DeFi on-ramp and off-ramp: jEUR has an indirect 0-fee fiat on and off-ramp through Monerium, and a direct fiat on and off-ramp through Monerium. This pool can help users to buy PAR with Euros or to sell PAR for Euros.

A few notes:

  • PAR & jEUR already have a gauge on Polygon: 2eur (PAR)
  • Parallel & KUMA Protocols already have a gauge on their wUSK/paUSD/USDC pool on Ethereum: wUSK/paUSD/USDC
  • Jarvis LTD has started building positions in BAL, TETU and AURA. The Jarvis Network treasury (governed by the JRT token, which will soon be revamped using the ve-model, a new token called JARVIS, and an 80/20 JARVIS-ETH pool) is planning on building the same positions.
  • Jarvis LTD and the Jarvis Network treasury will both supply liquidity in the Synthereum Liquidity Pool. They will use up to 50% of the fees generated through the Liquidity Pools for vote incentives for veBAL, vlAURA, tetuBAL etc. (we have already done this successfully for a few months now on BNB Chain with Ellipsis / DotDot).
  • Mimo Labs has started building positions in AURA (310k $vlAURA & 53k $AURA) & BAL and the Parallel Protocol treasury currently holds 20k $vlAURA.
  • Mimo Labs is currently buying ±$200k AURA which will be locked to incentivize the liquidity.
  • The Parallel DAO will also pay ±$225$ voting incentives per week for the pool using the Paladin Quest vote marketplace to the pool (more details here 1)

Specifications:

  1. Governance:
  • Parallel Protocol: none on-chain governance (vote via snapshot) and decisions are executed through a ⅝ multi-sig (4 team members and 4 dao members elected by vMIMO holders).
    • Polygon PoS: 0x2046c0416A558C40cb112E5ebB0Ca764c3C5c32a
    • Ethereum: 0x25Fc7ffa8f9da3582a36633d04804F0004706F9b
    • Fantom: 0x174162ddecE9d0b7B68fd945e38c3372C4C818ba
  • KUMA Protocol: none on-chain governance (vote via snapshot) and decisions are executed through a 4/7 multi-sig (currently held by 7 team members, but a proposal to elect DAO members will take place later).
    • Ethereum: 0xB5502747AABDCa21E832951b4caaF739dA33f450
    • Polygon PoS: 0x1A1A402746FBe8bcFE0f7992AE27c4eD81A70156
    • Linea: 0x1151d63eB6154843D4b4898cF4C63aF556642997
    • Mantle: 0x37D1C94087643dFE5288F72cD1e4A6fde5b130A9
  1. Oracles:
  1. Audits:
  1. Assets & Centralizing vector:
  • PAR has a debt limit on each collateral, is partially collateralized by USDC (≈ 30%) and the ownership of the Parallel protocol and is held by a 5/8 multisig with 4 signers from Mimo Labs and 4 signers elected by vMIMO holders.
  • jEUR is mainly collateralized by USDC
  • wFRK is an erc-4626 wrapper of FRK. FRK is a freely transferable Interest Bearing token backed by French T-bills offering approximately 3,38% APR. The KUMA Protocol accepts to swap regulated NFTs (KUMA NFTs) backed by bonds in exchange of composable interest-bearing tokens (KIBT) based on the metadata of the NFT.
  1. Market history:
  • PAR has been live since April 2021 (on Ethereum); PAR is soft pegged to EUR
  • wFRK has been live since November 2023 (on Polygon); wFRK is an erc-4626 wrapper of FRK. wFRK accrue value according to the underlying French T-bills yield.
  • jEUR has been live since August 2021 (on Polygon); it has never traded off its peg.
  1. Value:
  • The wFRK/PAR/jEUR (p-cs-kp-eur) pool will act as the main route for arbitrages and the use cases mentioned above (on-chain liquidity, etc.).

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):0xc4a2d0F9fC0f5828DA05e8399B4f38a345447d63
gaugeType(string): Polygon

2

The wFRK rate provider was reviewed by the integrations team here. The Summary judgement is “safe”.

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https://snapshot.org/#/balancer.eth/proposal/0x382fef064547b1ea8de36777ba4cb7a0beb64748a686f109ad0b8816572db6a4

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