[BIP-810] Enable slpUSD/waEthUSDC Gauge

BAL Gauges
1

PR with Payload

Summary:
We propose enabling a Balancer gauge for the slpUSD-waEthUSDC Stableswap pool on Ethereum Mainnet. This pool will serve as the primary liquidity venue for slpUSD, Loop’s yield-bearing USDC derivative.

References/Useful links:

Link to:

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 slpUSD, a yield-bearing USDC receipt token that captures revenue from Loop’s lending activities and is collateralized by a diversified index of stablecoins. slpUSD is the staked form of lpUSD 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 slpUSD directly.

When users deposit USDC into Loop, they receive lpUSD which can be:

  1. Staked to earn lending yields
  2. Locked in dLP (Loop’s governance token based on Balancers ve80/20 model)
  3. Provided as liquidity in AMM pools

The lpUSD token is designed to always be backed 1:1 with USDC, 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 lpUSD-waEthUSDC which serves multiple purposes:

  1. Capital Efficiency: Enables seamless entry/exit for USDC lenders with low slippage
  2. Price Stability: Helps maintain slpUSD peg through arbitrage
  3. Yield Enhancement: Provides additional revenue for slpUSD holders through swap fees
  4. Protocol Growth: Facilitates broader adoption of Loop’s lending markets
  5. Benefit Balancer Treasury: A portion of the pool fees will be directed to the Balancer treasury, in line with protocol revenue-sharing standards.
  6. 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:
  7. Ensures sustainable liquidity for slpUSD-waEthUSDC and future Loop-related pools
  8. Creates additional yield opportunities for Loop users through BPT collateralization
  9. Demonstrates long-term commitment to the Balancer ecosystem
  10. 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 Q2 2025

Oracles:

  • Primary price feeds: Chainlink USDC/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 slpUSD-waEthUSDC pool will serve as the primary liquidity venue for slpUSD with several value drivers:

  • Strategic Value:
    • Essential infrastructure for Loop’s lending markets
    • Complementary to Balancer’s existing USDC-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 eth:0xc38c5f97B34E175FFd35407fc91a937300E33860 will interact with the GaugeAdderv4 at 0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd and call the addGauge function with the following arguments: gauge(address):0x5fd7c7883c3acd8b77f5de743168107c209fd33d
gaugeType(string): Ethereum

Edit Maxis:

  • tech spec
  • gauge id
  • pool id
2

https://snapshot.box/#/s:balancer.eth/proposal/0x0c47b5f5bbfdba42baf90b8418c9ecdd9c6e20a1c6b3deb7e3ee403be85ffce8