[BIP-603] Enable Gauge for PAR/EUROe Pool with a 2% cap (Polygon PoS)

BAL Gauges
1

PR with Payload

Summary:

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

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

EUROe is a stablecoin backed by Euros and issued by MembraneFi.

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:

EURoe (MembraneFi):

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.

Membrane Finance - EUROe

Membrane Finance is the issuer of EUROe, an overcollateralized euro stablecoin that is regulated as electronic money in the EU by the Finnish Financial Supervisory Authority. Membrane Finance is the first EU-regulated euro stablecoin issuer.

EUROe’s status as electronic money, or e-money for short, ensures its compatibility with current and upcoming regulation. For each EUROe issued, there exists at least one fiat Euro in a European financial institution or bank, ring-fenced from Membrane Finance. In addition to the 1:1 reserve requirement, the legislation imposes a own funds requirement of at least 2% of CET1 equity capital equivalent. In practice, this means that all EUROe in circulation are backed by reserve assets and equity buffer equal to 102% of the issued EUROe.

New EUROe can be minted or existing EUROe can be redeemed to fiat euros by Membrane Finance’s customers. Membrane Finance currently onboards corporate customers, subject to the current Know-Your-Business (KYB), Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), and Know-Your-Customer (KYC) policies of Membrane Finance. Membrane Finance’s customers can mint & redeem EUROe 1:1 to fiat euros. Minting, redemption, and use of the EUROe service are free. For more information about the fees, see Pricing at euroe.com. In order to preserve the privacy of the end-users of EUROe, Membrane Finance does not currently onboard individual users.

Motivation:

The role of the PAR/EUROe E-CLP pool is to increase the stability of PAR and EUROe, the on-chain liquidity of both PAR and EUROe, connect the Parallel and Membrane ecosystems and providing a fiat gateway to PAR & EUROe 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 & EUROe. This hub-and-spoke network will enable a liquid secondary market for PAR & EUROe to make it easier to exit from/ enter into PAR & EUROe.

By using E-CLPs a comparably small amount of initial capital can provide a disproportionately deep market for PAR & EUROe. 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 (the Parallel governance token) already gauges on Balancer Ethereum & Polygon: p-MIMO/WETH 80/20 / MIMO/WETH 80/20
  • 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.

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
  • Membrane: EUROe is a centralized stablecoin. The role-based access control mechanisms are explained in the documentation.
  1. Oracles:
  • Parallel mainly uses Chainlink price feeds for all its collateral assets.
  • EUROe does not use any oracles. The value of EUROe is guaranteed by 1:1 minting & redemption rate from/to fiat euro. EUROe 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.
  • EUROe is controlled by addresses secured with multi-party computation (MPC). The EUROe contracts are upgradable and implemented through a ERC-1967 proxy.
  1. Market history:
  • PAR has been live since April 2021 (on Ethereum); PAR is soft pegged to EUR.
  • EUROe is legally recognised as euro and is redeemable by law, hence the peg should track euro price closely. EUROe has been live on Ethereum since the end of January, and its price has closely tracked that of euro.
  1. Value:
  • The PAR/EUROe 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): 0x7f5A5c80cEeB1C91718a71030F67788F3810be98
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: 0x7f5A5c80cEeB1C91718a71030F67788F3810be98 being the PAR/EUROe 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.

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https://snapshot.org/#/balancer.eth/proposal/0x77e1f5bbd890b44cba1a798dc4ab3a740d5093015e89bf1773362cd616da11ef

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