[BIP-878] Enable Gauge for USDp/frxUSD Stable Pool with a 2% cap (Base)

BAL Gauges
1

PR with Payload

Summary:

Enable a Balancer gauge for the USDp/frxUSD (USDp-frxUSD) StableSurge pool with a 2% cap on Base.

USDp is fully backed by a basket of correlated assets and issued by the Parallel Protocol.

frxUSD is backed by a hybrid model that allows for governance-approved enshrined custodians to mint/redeem the stablecoin by holding cash-equivalent reserves while also having onchain mechanisms.

The pool is a StableSurge pool. StableSurge pools are a type of stable pool designed for assets that usually trade at nearly the same value or have a predictable exchange rate. What makes StableSurge pools different is that they use a special feature, called a hook, to automatically adjust the swap fee based on how balanced the pool is during a trade.

References/Useful links:

Parallel:

Frax:

Protocol Description:

Parallel

Parallel is a scalable, modular, over-collateralized & decentralized stablecoin protocol issuing USDp, a crypto-redeemable stablecoin backed by yield generating correlated assets, with cross-chain support via LayerZero.
The protocol consists of a decentralized price-stability module where you mint/burn USDp at oracle price (not 1:1) against correlated assets without any cooldown. Generated yield by backing of the stablecoin is distributed to stablecoin stakers.

Currently a USD stablecoin, called USDp is deployed across 16 chains:

  • USDp: Parallel USD Stablecoin

  • sUSDp: Staked USDp (4626), receive yield from the stablecoin backing

Frax

Frax Finance is a unified DeFi ecosystem issuing three “stable” assets—frxUSD (USD-pegged), FPI (CPI-indexed unit of account), and frxETH (ETH-pegged LSD with a yield-accruing sfrxETH).

frxUSD is a fully backed digital dollar, redeemable 1:1 and collateralized by tokenized U.S. Treasury funds (e.g., BlackRock BUIDL, Superstate USTB, WisdomTree WTGXX) and onchain tokens (e.g. sUSDe)

Motivation:

The role of the USDp/frxUSD StableSurge pool is to increase the on-chain liquidity of USDp & frxUSD, while connecting the Parallel and Frax ecosystems.

The capital efficiency of StableSurge pools will help to quickly bootstrap a liquidity network for USDp & frxUSD.

By using StableSurge a comparably small amount of initial capital can provide a disproportionately deep market for USDp & frxUSD.

A few notes:

  • Frax will incentivize the pool by depositing voting incentives the pool with $1k per week.

  • Mimo Labs, a contributor of the Parallel Protocol built positions in AURA (1M vlAURA), used to vote for Parallel pools.

  • The Parallel Protocol treasury currently holds ±90k vlAURA, used to vote for Parallel pools.

  • The Parallel Insurance Fund holds ±1.3M AURA, used to vote for Parallel pools.

  • Parallel has been using Balancer since June 2021 for Parallel assets.

Specifications:

  1. Governance:

  • Parallel: none on-chain governance (vote via snapshot) and decisions are executed through a ⅝ multi-sig (elected by sPRL holders).

  • Frax: Protocol changes and key actions flow through veFRAX governance + gnosis safes.

  1. Oracles:

  • Parallel rely on Chainlink & Redstone price feeds for mint & burn.

  • Frax supply is minted/burned 1:1 by “enshrined custodians” holding cash-equivalent reserve tokens (e.g., BUIDL, USTB); issuance is tied to those reserves via the frxUSDCustodian contracts, not a price oracle.

  1. Audits:
  1. Assets & Centralizing vector:

  • Parallel: The DAO Multisig can upgrade all USDp related contracts. Part of the backing of USDp may be centralized assets, which is not the case right now.

  • Frax: frxUSD relies on enshrined custodians (tokenized T-bill funds) for 1:1 mint/burn, reserve-layer whitelists and custodian operations are key trust/centralization points.

  1. Market history:

  • USDp has been live since August 2025 on Base; USDp is pegged to USD.

  • frxUSD has been live since February 2025 on Base; frxUSD is pegged to USD.

  1. Value:
  • The USDp/frxUSD stable pool will act as the main route for arbitrages and the use cases mentioned above (on-chain liquidity, etc.).

Contracts

Technical Specification

The Balancer Maxi Omni-Sig 0x9ff471F9f98F42E5151C7855fD1b5aa906b1AF7e will interact with the GaugeAdderv4 at 0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd and call the addGauge function with the following arguments: gauge(address):0x533382463506f3b513ebbe9f2be7fbb49ccaef25
gaugeType(string): Base

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Edit by Maxis:

  • add payload
  • add technical specification
3

https://snapshot.box/#/s:balancer.eth/proposal/0x75c4ab3d93950a86e73e9507a817865074e83b4d1e115ed5a0a0180bd3157e15

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