[BIP-XX] Enable FLOAT/USDC 80/20 and BANK/WETH 50/50 Gauges [Ethereum]

Summary:
Whitelist the gauges for the pools:

References/Useful links:

Link to:

Protocol Description:

Float Protocol: DeFi Money. FLOAT is a decentralised non-pegged low volatility currency for DeFi. FLOAT gently tracks a basket of digital assets instead of matching the value of a dollar. Float Protocol also consists of BANK, its governance token and, value and support capture for FLOAT.

Motivation:

We are pushing towards a fees and bribes mechanism for liquidity. We have many other liquidity sources namely Uniswap v3 and Sushiswap. We are keen to change to a liquidity incentivisation scheme from traditional liquidity mining to bribing. Balancer is the perfect place to achieve this goal especially considering the fantastic integration with Aura Finance. Utilizing Balancer in conjunction with Aura Finance enables fees and bribes for liquidity that would be difficult to achieve on Uniswap v3 to the same degree.

Specifications:

  1. Governance: Provide current information on the protocol’s governance structure. Provide links to any admin and/or multisig addresses, and describe the powers afforded to these addresses. If there are plans to change the governance system in the future, please explain.

We plan to move forward to a fully fledged DAO potentially using Gnosis SnapSafe and Yearn Coordinape for community incentives. For the time being here are the procedures for governance:

If you want to propose something within Float Protocol, the stages are as follows:

  1. The proposer starts a discussion in discord under the #:ballot_box:governance channel.
  2. If there is sufficient interest (as reasonably defined by the person suggesting the idea), the proposer should start a discussion on our Forum. This proposal should last at least 3 days.
  3. If there is sufficient interest on the forum, the Float team will schedule an official vote on Snapshot where users can vote with their BANK. For now, before the team has their tokens, the team will have discretion over which proposals proceed to a Snapshot vote. (Note, right now anyone can propose a vote on Snapshot and this will remain the case. However, votes not initiated by the team will be considered ‘temperature checks’ on whether there is community interest for a properly structured proposal — for example Snapshot).
  4. The Snapshot will always last at least 3 days.
  5. After the vote has finished, if successful, the results of the vote are executed by the team and approved by the multi-sig.

Multisigs:

Treasury Multisig (3/6):
Address: 0xF7778C13eA98a857312F2b6a6f3bbc4Ac344fF67

  • Manages treasury
  • Manages Float Protocol 48 hour Timelock
  • Controls BANK mints

Developer Multisig (3/4)
Address: 0x383dF49ad1f0219759a46399fE33Cb7A63cd051c

  • Small developer fund for keeping protocol running such as funding oracles, servers, hosting
  • Manages Float Protocol Auction timer
  • Manages liquidity mining pool rewards release
  1. Oracles: Does the protocol rely on external oracles? If so, provide details about the oracles and their implementation in the protocol.
  1. Audits: Provide links to audit reports and any relevant details about security practices.

Audit reports: Audits completed by Extropy and CertiK: Audits - Float Protocol

  1. Centralization vectors: Is there any component of the protocol that has centralization vectors? E.g. if only 1 dev manages the project, that is a centralized vector. If price oracles need to be updated by a bot, that is a centralized vector. If liquidations are done by the protocol, that is also a centralization vector.

Centralization risks include but are not limited to:

  • GitHub - we perform offline backups of code in the event of repository deletion
  • Price oracles need to be updated by a bot, however, can move to Uniswap v3 oracles.
  • Minting of BANK is community governed and is controlled by the treasury multisig behind 48hr timelock as well as core Protocol contract (Auction House). The BANK minting capabilities of the Auction house is capped and currently is less than individual holders.
  • Governance Discussions occur on a centralised server run by the Protocol (forum.floatprotocol.com)
  1. Market History: Has the asset observed severe volatility? In the case of stablecoins, has it depegged? In the case of an unpegged asset, have there been extreme price change events in the past? Provide specific information about the Balancer pool: how long has it been active, TVL, historical volume? You must provide a direct link to the pool AND a link to your pool’s gauge.

FLOAT is a non-pegged stablecoin which behaves as a low-volatility representation of ETH. For example, ETH has decreased by ~66% since all time high, Float has decreased ~20% since ETH all time high (10th of November 2021 - to 24th of July 2022).

BANK captures the volatility of FLOAT, as well as capturing any speculative demand. In return, it supports the price of FLOAT in times of reduced demand. This makes BANK much more volatile than FLOAT. BANK has been distributed via traditional liquidity mining pools.

Balancer Pools:

[50BANK-50ETH]:

  • launched 18th of July 2022
  • TVL: 1.9K USD
  • VOL: 2K USD/90 days
  • Pool: Balancer
  • Gauge: 0x9795B9f02984cb9a09E03FB975b1D4285CEd80Fe

[80FLOAT-20USDC]:

  • launched 16th of July 2022
  • TVL: 4.7K USD
  • VOL: 150 USD/90 days
  • Pool: Balancer
  • Gauge: 0x9D5d7CF33758f92Fb0F79B7b4A90EFF37ba7f505
  1. Value: Is this pool intended to be the primary source of liquidity for the token(s)? If this is not the case, explain the expected value add to Balancer (can this pool generate consistent fees?)

As stated in earlier, we are pushing towards a fees and bribes mechanism for liquidity. We have many other liquidity sources namely Uniswap v3 and Sushiswap. Given the nature of FLOAT pricing characteristics, there are ample opportunities for arbitrage especially via the regular (daily) Dutch Auctions run by the Protocol. <-This isn’t well known so one could consider it alfa :smile: . With sufficient liquidity on Balancer there is a good chance that both the Balancer FLOAT-USDC and BANK-WETH pools obtain a slice of the Dutch Auction arbitrage pie. Moreover, FLOAT is one of the first truly decentralised stablecoins of its kind and following the recent events regarding USDC we feel that it is prime time to have the opportunity to support such a pool on Balancer.

2 Likes

why does FLOAT need an 80/20 pool exactly? forgive me if you addressed this point in your post but I didn’t see it.

From an exposure perspective. Users get the opportunity to have a reduced volatility version of ETH, with a bit of USDC while being long on FLOAT. Do you think it is more suited for a 50/50?

I’d only suggest a 50/50 purely from the desire for Balancer to have the best opportunity to see revenue generated from these pools. We’re dealing with assets that are very tiny if coingecko market caps are accurate. It is arguable if adding such gauges is worthwhile for us when you consider the likely revenue (swap fees) these pools will generate.

Since your auctions rely on TWAPs from Sushi, Balancer would not even be the primary liquidity of these two tokens?

Completely get you here. Currently yes, the TWAPs are from Sushi, but there is no reason why they couldn’t be moved.

1 Like

Echoing Solarcurve’s concerns, market cap and daily volume are relatively low for these two tokens. I would think a 50/50 gauge would make the community more receptive to these pools. Personally, I would like to not approve any more gauges with these traits until the framework presented, or an alternate one is in place.

Another suggestion would be to move the pools to Balancer and have them gain some performance data. Move primary liquidity & markets here, and when incentives seem mutually beneficial with the risks minimized we can all move forward confidently. I understand this then poses some risk for you as well though.

2 Likes

Well written proposal but I have to argue that volume and TVL are microscopic. I don’t think it is worth it to add them as it currently stands.

I am this critical as we had a lot of dead gauges that were grandfathered in which ultimately landed on the purge list. They had more TVL as these proposed gauges. I have the suspicion that not much liquidity will be attracted even with bribes.

1 Like

Really appreciate the comments so far [1, 2, 3], I agree the incentives must be aligned here. Currently discussing internally the potential of deploying Float Protocol treasury funds to support the TVL. Obviously there is still the concern of volume but it is a reasonable start in the right direction. :slightly_smiling_face:

2 Likes