[BIP-886] Enable Gauge for Nerite Surge eeUSDC-yUSND Stable Pool with 2% Cap on Arbitrum

BAL Gauges
1

PR with Payload

Summary

Enable a Balancer gauge for the Nerite Surge eeUSDC-yUSND Stable Pool with a 2% cap on Arbitrum.

This pool provides deep liquidity between yUSND (yield-bearing USND) and eeUSDC (Euler vault USDC). To bootstrap liquidity, Nerite will provide 4,000 USND in bribes distributed over the next 2 months to vlAURA voters who support this gauge.

References/Useful Links

Protocol Description

Nerite Protocol is a decentralized borrowing protocol on Arbitrum that issues USND, an overcollateralized stablecoin based on Liquity V2 architecture.

USND is the protocol’s native stablecoin:

  • Overcollateralized by 9 crypto assets: WETH, wstETH, rETH, rsETH, weETH, tETH, ARB, COMP, tBTC

  • Superfluid SuperToken enabling streaming payments every second

  • Maintains $1 peg through redemption mechanism

  • Current supply: 2,384,468 USND

yUSND (this pool’s token) is yield-bearing USND:

  • Created and managed by Yearn Finance

  • ERC-4626 vault that optimizes USND deposits across all stability pools

  • Earns yield from borrower interest payments, liquidation fees, and NERI incentives

  • No lockup period - liquid and redeemable anytime

eeUSDC (paired token) is Euler’s yield-bearing USDC vault.

Pool Type: Balancer V3 Stable Pool optimized for low-volatility stablecoin pairs.

Motivation

This gauge is needed to:

  1. Bootstrap Liquidity: Attract LPs to provide deep liquidity for yUSND/eeUSDC trading

  2. Reduce Slippage: Enable efficient swaps between yield-bearing stablecoin assets

  3. Strengthen USND Utility: Create a liquid secondary market for yield-bearing USND

  4. Incentivize Long-term LPs: BAL rewards + native yield create attractive APY

  5. Ecosystem Growth: Connect two major Arbitrum stablecoin protocols

Bribe Commitment: 4,000 USND over 2 months (8 epochs) distributed pro-rata to vlAURA voters.

Specifications

1. Governance

Nerite Protocol Governance:

  • Governance Token: NERI (not yet live)

  • Governance Model: Minimal governance, official “friendly fork” of Liquity V2 with exclusive Arbitrum rights

  • Core Protocol: Immutable contracts that cannot be upgraded

  • Future NERI Powers: Update debt limits, direct 25% of protocol revenue, control treasury

  • Restrictions: NERI holders CANNOT mint USND, upgrade protocol, add collateral, or change fees

Key Addresses:

  • DAO/Governance: 0x108f48E558078C8eF2eb428E0774d7eCd01F6B1d

  • USND Token: 0x4ecf61a6c2fab8a047ceb3b3b263b401763e9d49

2. Oracles

Nerite leverages Api3’s OEV (Oracle Extractable Value) oracles as its primary price feed solution:

  • Api3 provides reliable price data for all 9 collateral types

  • Generates additional protocol revenue through OEV rewards

  • Captures value that would otherwise leak to MEV bots and arbitrageurs

  • No external oracles required for USND/yUSND pricing (internal accounting based on vault shares)

3. Audits

Nerite-Specific Audits:

  • Sherlock audit in collaboration with 0xSimao - Report

  • Automated vulnerability testing with Octane on all pull requests

  • All contracts verified on Arbiscan

Liquity V2 Base Protocol:

  • Official “friendly fork” with exclusive Arbitrum rights and Liquity team support

  • Base protocol audited by Cantina and Code4rena

  • Built on battle-tested Liquity V1 architecture (billions in TVL since 2021)

4. Centralization Vectors

Minimal Centralization:

  • Smart Contracts: Immutable core logic (cannot be upgraded)

  • Governance: Minimal; NERI holders have limited powers (debt limits, 25% revenue, treasury only)

  • Oracles: Decentralized Api3 OEV oracles

  • Liquidations: Permissionless

  • Restrictions: Cannot mint USND, upgrade protocol, add collateral, or change fees

5. Market History

Pool History:

Price Stability:

  • USND maintains peg via redemption mechanism (Liquity model)

  • No depeg events since launch

  • yUSND is yield-bearing vault token (ERC-4626), not a stablecoin

6. Value

Primary Liquidity:

  • Key liquidity venue for yUSND on Arbitrum

  • Enables efficient yUSND ↔ USDC swaps via eeUSDC

  • Provides exit liquidity for Nerite Stability Pool depositors

Fee Generation:

  • Stable pool optimized for high volume, low slippage

  • Both tokens yield-bearing, attracting LPs organically

  • Consistent volume from Nerite user flows and arbitrage

Value to Balancer:

  • Strengthens Arbitrum stablecoin liquidity hub

  • Attracts liquidity from two growing protocols (Nerite + Euler)

  • Low IL risk, consistent fees

  • 4,000 USND bribes demonstrate long-term commitment

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):0x6F7F4E708d54e314892Df3d6960e1dd987F75141
gaugeType(string): Arbitrum

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Edit by MAXYZ:

  • assign BIP ID
  • add payload
  • add tech spec
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https://snapshot.box/#/s:balancer.eth/proposal/0x038e99f1165bdef42ed93364bef55d3ed69b1ec62a4692a799d1083116ea567b

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