[BIP-602] Enable Gauge for PAR/EURe Pool with a 2% cap (Polygon PoS)

BAL Gauges
1

PR with Payload

Summary:

Enable a Balancer gauge for the PAR/EURe (ECLP-PAR-EURe) E-CLP with a 2% cap on Polygon PoS.

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

EURe is a stablecoin backed by Euros and issued by Monerium.

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 stablecoins and liquid staking tokens; is typically more capital efficient and could thus generate significant trading volume.

References/Useful links:

Parallel Protocol (prev. Mimo Protocol):

Link to:

Monerium:

Link to:

Protocol Description:

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.

Monerium

Monerium is authorized and regulated as an Electronic Money Institution (EMI). Monerium offers services to residents of the European Economic Area, the UK, and Switzerland. Monerium is authorized to issue e-money tokens on blockchains.

Monerium issues the EURe, a Euro stablecoin with a 102% backing. EURe is more than one-to-one backed in high-quality liquid assets and is redeemable on demand. Unlike a bank, an Electronic Money Institution can only safeguard customer funds but not make loans.

Motivation:

The role of the PAR/EURe E-CLP pool is to increase the stability of PAR and EURe, the on-chain liquidity of both PAR and EURe, connect the Parallel and Monerium ecosystems and provide a fiat gateway to PAR & EURe holders on Ethereum. Together, these 4 points allow for building a Bonds DeFi ecosystem.

The capital efficiency of E-CLPs will help to quickly bootstrap a liquidity network for PAR & EURe. This hub-and-spoke network will enable a liquid secondary market for PAR & EURe to make it easier to exit from/ enter into PAR & EURe.

By using E-CLPs a comparably small amount of initial capital can provide a disproportionately deep market for PAR & EURe. 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.

A few notes:

  • PAR (the Parallel EURO stablecoin) already have a gauge on Balancer Polygon: 2eur (PAR)
  • paUSD (the Parallel USD stablecoin) already have a gauge on Balancer Ethereum: e-cs-kp-USD
  • Mimo Labs has started building positions in AURA (±554k $vlAURA) & BAL and the Parallel Protocol treasury currently holds 23k $vlAURA.
  • Mimo Labs is still buying AURA which will be locked to incentivize the liquidity.
  • MIMO (the Parallel governance token) already gauges on Balancer Ethereum & Polygon: p-MIMO/WETH 80/20 / MIMO/WETH 80/20

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
  • Monerium: has no on-chain governance.
  1. Oracles:
  • Parallel mainly uses Chainlink price feeds for all its collateral assets.
  • EURe does not use any oracles. The value of EURe is guaranteed by 1:1 minting & redemption rate from/to fiat euro. EURe is legally recognised as euro.
  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.
  • EURe, Monerium is backed by Euros.
  1. Market history:
  • PAR has been live since April 2021 (on Ethereum); PAR is soft pegged to EUR
  • EURe has been live since May 2022 (on Polygon); as Monerium can be minted/redeemed against Euros, it has held its peg even though its low liquidity creates stability issues from time to time (always arbed).
  1. Value:
  • The PAR/EURe E-CLP pool will act as the main route for arbitrages and the use cases mentioned above (on-chain liquidity, etc.).

Contracts

Technical Specifications

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): 0x9b2defbf22be1ccd63f36dadf69842feb5e7b8df
gaugeType(string): Polygon

The Balancer DAO Multisig 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will interact with the Authorizer 0xA331D84eC860Bf466b4CdCcFb4aC09a1B43F3aE6 calling grantRole with the following arguments:
role: 0xae60dce27f51ce5815357b9f6b40f200557867f8222262a1646c005d09b7dfba
This role corresponds to setRelativeWeightCap(uint256) on mainnet gauges and can be confirmed here balancer-deployments/action-ids/mainnet/action-ids.json at de8c3a52cb62185469dbbc90589afa83e5490760 · balancer/balancer-deployments · GitHub.
account: 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f

The Balancer DAO Multisig 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will interact with the AuthorizerAdaptorEntryPoint at 0xf5dECDB1f3d1ee384908Fbe16D2F0348AE43a9eA and call performAction with
target: 0x9b2defbf22be1ccd63f36dadf69842feb5e7b8df being the PAR/EURe root gauge and data 0x10d3eb0400000000000000000000000000000000000000000000000000470de4df820000 to set the cap to 2%
The Balancer DAO Multisig 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f will interact with the Authorizer 0xA331D84eC860Bf466b4CdCcFb4aC09a1B43F3aE6 calling revokeRole with the following arguments:
role: 0xae60dce27f51ce5815357b9f6b40f200557867f8222262a1646c005d09b7dfba
account: 0x10A19e7eE7d7F8a52822f6817de8ea18204F2e4f to revoke the previously assigned role to change gauge weights.

1 Like
2

This gauge currently is uncapped but the proposal says 2%. Is there a preference here? The DAO Multisig would just need to atomically setRelativeWeightCap to 2% if this is preferred.

1 Like
3

I agree with @ZenDragon - all proposals including this one should have a 2% cap as intended. As you guys already set up all gauges and childchaingauges it is easier to set the cap of 2% instead of redepoying everything.

Edit: the only risk I see with this approach is that it needs a timely execution of all transactions:

  1. Balancer LM multi-sig controlled by the Maxis adds gauges before the next voting round
  2. It needs to be guaranteed, that the DAO multisig sets gauge weights to 2% before the next voting round which concludes on Wednesday 00:00 UTC

This approach is not ideal but would be an option. Alternatively, as mentioned above, redeploy all root and Childchain gauges

1 Like
4

Hey, indeed there was an oversight when deploying the gauges. Based on your recommendations I have added the technical specifications to atomically setRelativeWeightCap to 2%.

1 Like
5

https://snapshot.org/#/balancer.eth/proposal/0x8383088c618834812251407cccb3f7fcc93af9b3b7fdffb1b890eef10bd4312b

1 Like