PR with Payload
Summary:
We propose enabling a Balancer gauge for the slpETH-gtWETHe Stableswap pool on Ethereum Mainnet. This pool will serve as the primary liquidity venue for lpETH, Loop’s yield-bearing ETH derivative.
References/Useful links:
Link to:
- Website: https://loopfi.xyz
- Documentation: https://docs.loopfi.xyz
- Github Page: Loop Finance · GitHub
- Communities: Loop
- Token Pair: lpETH / gtWETHe
- Gauge Address: 0x6c8C40AC9dB79C55cE5189c9b93a2a53081CED74
- Pool Address: 0x2b261C98A81cfda61BeE7BFcf941A3D336be7957
- Deployment Chain: Ethereum Mainnet
Protocol Description:
Loop Finance is a specialized lending protocol designed to optimize leverage strategies for DEX LP tokens, with an initial focus on Pendle LP tokens. A key protocol innovation is lpETH, a yield-bearing ETH receipt token that captures revenue from Loop’s lending activities and is collateralized by a diversified index of LRTs. slpETH is the staked form of lpETH which will receive protocol revenue and has a 7 day withdrawal period. This Balancer Pool will bypass this 7 day period by allowing people to sell slpETH directly.
When users deposit ETH into Loop, they receive lpETH which can be:
- Staked to earn lending yields
- Locked in dLP (Loop’s governance token based on Balancers ve80/20 model)
- Provided as liquidity in AMM pools
The lpETH token is designed to always be backed 1:1 with ETH, while growing the Net Asset Value (NAV) through various protocol mechanisms including:
- Compounding revenue distribution from lending activities
- Arbitrage opportunities between direct minting/redemption and AMM trades
- Collateralisation by a diversified basket of high yielding LRT restaking strategies
- Swap Fees
Motivation:
Establishing a gauge for this pool will catalyse deep, stable liquidity for lpETH-WETH which serves multiple purposes:
- Capital Efficiency: Enables seamless entry/exit for ETH lenders with low slippage
- Price Stability: Helps maintain lpETH’s peg through arbitrage
- Yield Enhancement: Provides additional revenue for lpETH holders through swap fees
- Protocol Growth: Facilitates broader adoption of Loop’s lending markets
- Benefit Balancer Treasury: A portion of the pool fees will be directed to the Balancer treasury, in line with protocol revenue-sharing standards.
- Strategic veBAL Accumulation:
Loop is committed to becoming a significant veBAL holder to align long-term incentives with the Balancer ecosystem. Our protocol plans to integrate Balancer Pool Tokens (BPTs) as supported collateral, creating a synergistic relationship where veBAL voting rights will be used to direct liquidity incentives toward these integrated pools. This strategy serves multiple purposes: - Ensures sustainable liquidity for lpETH-WETH and future Loop-related pools
- Creates additional yield opportunities for Loop users through BPT collateralization
- Demonstrates long-term commitment to the Balancer ecosystem
- Enables collaborative governance participation in both protocols
Specifications:
Governance:
Loop operates under a dual governance structure:
- Technical Administration: 2/3 Multisig (addresses to be provided)
- Protocol Parameters: dLP token holder voting
- Admin capabilities include:
- Emergency pause functionality
- Collateral parameter adjustments
- Fee distribution updates
- Timelock: 24 hours for parameter changes, no system upgrades possible
- Future plans include transitioning to full DAO governance with TGE of LOOP by Q1 2025
Oracles:
- Primary price feeds: Chainlink ETH/USD
- Secondary price feeds: Time-weighted Balancer pool prices
- Collateral pricing: Combination of constituent asset oracles and pool pricing
- Failsafe: Circuit breakers on extreme price movements
Audits: (Security | Loop)
- Audit 1: Watchpug completed
- Audit 2: Code4rena completed
- There is an ongoing bug bounty for $100,000 on code4rena
Centralisation Vectors:
No centralisation vectors
Market History:
Protocol information and market history can be found here on the Loop Dune dashboard:
https://dune.com/rangonomics/loopfi
Value:
The slpETH-WETH pool will serve as the primary liquidity venue for slpETH with several value drivers:
- Strategic Value:
- Essential infrastructure for Loop’s lending markets
- Complementary to Balancer’s existing ETH-based pools
- Potential integration with other Balancer pools through composability
- With TGE of the LOOP token, Loop will introduce dLP tokenomics which means that locked LOOP tokens will be sent to Balancer similar to Radiant Capital.
- Growth Potential:
- Targeted TVL growth to $20 million within 6 months
- Integration with major lending protocols planned
- Super-chain expansion roadmap (Scroll, Optimism)
Technical Specification
The Balancer Maxi LM Multisig 0xc38c5f97B34E175FFd35407fc91a937300E33860
will interact with the GaugeAdderv4 at 0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd
and call the addGauge function with the following arguments:
gauge(address):0x6c8C40AC9dB79C55cE5189c9b93a2a53081CED74
gaugeType(string): Ethereum
Edit Maxis: PR and Tech spec