[BIP-548] Enable Gauge for sDOLA/DOLA [Ethereum]

PR with Payload

Summary:

Proposal to add DOLA/sDOLA to the Balancer Gauge Controller.
Stableswap pool deployed here.
Uncapped gauge deployed here.
sDOLA Rate provider review deemed SAFE. Can be seen here.

References/Useful Links:

About Inverse Finance

Protocol Description:

About Inverse Finance

Inverse Finance is a community of crypto enthusiasts organized as a DAO and started on December 26th 2020. Inverse DAO governs and develops a suite of permissionless and decentralized financial tools using blockchain smart contract technology. The code base is open source and maintained by the community.

Inverse DAO’s core product is DOLA, a debt-backed USD stablecoin. DOLA is added into and removed from circulation;

  • On the supply side of money markets, such as DAO-owned protocol FiRM, by Inverse Finance’s “Fed” contracts and is then made available to be borrowed through over-collateralized loans.
  • Via injection/contractions into pools such as the Curve DOLA/FraxBP (currently $9.4M TVL), DOLA/USDC on Velodrome ($1.5M TVL), DOLA/USDC on Balancer ($2.8m TVL on ETH, $2.3m TVL on Arbitrum) and DOLA/USDbC on Aerodrome ($16.1m TVL).

DOLA is not “algorithmic” and the INV governance token is not used to mint or redeem DOLA.

Motivation:

We propose adding the DOLA/sDOLA stableswap pool on Balancer to the gauge controller, a strategic enhancement for both Inverse Finance and Balancer ecosystems. sDOLA, a novel yield-bearing ERC-4626 stablecoin introduced by Inverse Finance DAO, exemplifies innovation in the stablecoin domain. Leveraging Balancer’s advanced capabilities in managing yield-bearing assets, this integration aims to catalyze a dynamic and mutually beneficial relationship.

The establishment of the DOLA/sDOLA pool is crucial for the seamless operation of sDOLA within Balancer’s ecosystem, especially considering the anticipated growth and utilization of sDOLA. An efficient, aggregator-friendly mechanism for swapping between DOLA and sDOLA is essential to support the fluidity and accessibility of these assets, thereby facilitating the success of future sDOLA partnership pools.

At the heart of sDOLA’s yield generation is the borrowing demand for DOLA on FiRM, Inverse Finance DAO’s fixed-rate lending protocol. Borrowers of DOLA acquire DBR, an interest-bearing token, and spend it over time. Conversely, sDOLA depositors receive streamed DBR via the DOLA Savings Account, which is auto-compounded into sDOLA with an initial earn rate of 0.99 DBR per 1 DOLA staked per year, translating into a forecasted APR range of 11%-19% in the initial months post-launch. This attractive yield profile positions sDOLA as a compelling offering within the Balancer ecosystem. The goal is for sDOLA to be the go-to stablecoin to pair with other stablecoin issuers and reap the rewards of the high intrinsic yield going towards the Balancer flywheel.

By incentivizing a robust DOLA/sDOLA liquidity pool, we aim to enhance the ecosystem’s attractiveness and utility. This initiative will not only provide a solid foundation for sDOLA’s growth but also offer tangible benefits to the Balancer community and veBAL holders through increased liquidity, protocol fees, and diversification of yield-generating opportunities.

Specifications:

You can view analytics for DOLA on Defillama. To learn more about the protocol, please visit our official docs, governance and our transparency pages.

  1. Governance: Provide current information on the protocol’s governance structure. Provide links to any admin and/or multisig addresses, and describe the powers afforded to these addresses. If there are plans to change the governance system in the future, please explain.

Inverse Finance Fed contracts mint DOLA directly to the supply side of lending markets or to pools such as the DOLA/FraxBP Curve pool as demand increases, or they retract and burn DOLA from the supply when demand decreases. The Fed contracts are governed by the Inverse Finance DAO, which is controlled by INV holders through governance. A detailed description of our governance can be found here. Equally, check out our transparency portal here which gives a visual representation of Inverse Finance Governance.

  1. Oracles: Does the protocol rely on external oracles? If so, provide details about the oracles and their implementation in the protocol.

Inverse Finance’s new fixed-rate money market, FiRM, uses Chainlink price feeds for all markets on FiRM, with some implementations also utilizing Curve EMA price feeds.

  1. Audits: Provide links to audit reports and any relevant details about security practices.

Inverse Finance has undergone multiple audits and bug contests, which can be found linked here. sDOLA was audited by yAudit, which can be viewed here.

The DAO also now has dedicated members overseeing risk, what we call the Risk Working Group. An announcement of the team’s formation can be found here.

  1. Centralization Vectors: Is there any component of the protocol that has centralization vectors? E.g. if only 1 dev manages the project, that is a centralized vector. If price oracles need to be updated by a bot, that is a centralized vector. If liquidations are done by the protocol, that is also a centralization vector.

Within the DAO working groups have been formed to deliver work in specific areas. Often, these working groups will have a Multisig wallet that the DAO governance awards certain roles and limited DOLA or INV allowances in order to carry out required work. All granted privileges and allowances can be reclaimed/disabled by INV token controlled governance. These are:

  • Treasury Working Group (TWG): 3 of 5 Multisig with allowances giving access to Treasury funds to optimize treasury management.
  • Risk Working Group (RWG): 1 of 3 Multisig with privileges to pause actions in our (now disabled) lending market.
  • Policy Committee (PC): 4 of 8 Multisig that can change staking reward rate to INV stakers.
  • Fed Chair: 2 of 7 Multisig with the operator role on DOLA Fed Contracts, which allows for DOLA to be expanded/contracted under the Fed smart contract logic (bounded by market conditions)

Please see our Multisig Wallet section of the transparency portal here.

  1. Market History: Has the asset observed severe volatility? In the case of stablecoins, has it depegged? In the case of an unpegged asset, have there been extreme price change events in the past? Provide specific information about the Balancer pool: how long has it been active, TVL, historical volume

The DOLA stablecoin is soft pegged to $1, and like fully decentralized, over-collateralized stablecoins, can experience some volatility around this peg. Larger deviations (below $0.99) often recover fast due to the repegging mechanism built into the protocol (increasing borrowing cost on FiRM, AMM Fed contractions).

Specification

Transaction: 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): 0xCD19892916929F013930ed628547Cc1F439b230e

gaugeType(string): Ethereum

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https://snapshot.org/#/balancer.eth/proposal/0xf00fe054038993521807f645785164e92859459945698c00cb9b8fd35b435ebb