[BIP-XXX] Enable 80/20 Weighted Gauge for $OVN [Optimism, Arbitrum, and Base]

PR with Payload

Summary:

We propose the introduction of an 80/20 weighted gauge for $OVN on Optimism, Arbitrum, and Base with the pairing as OVN/wUSD+. This initiative aims to foster greater liquidity and facilitate smoother transactions for users on these platforms. By enabling this gauge, we anticipate enhancing the yield-generating opportunities for both the Balancer community and Overnight Finance users.

References/Useful links:

Website: https://overnight.fi
Twitter: https://twitter.com/overnight_fi
Discord: USD+ ┃Overnight Finance
Docs: https://docs.overnight.fi
Defillama: https://defillama.com/protocol/overnight-finance

Protocol Description:

Overnight.fi is a protocol focusing on asset management, with a specialization in neutral-risk strategies. At the heart of its product line is USD+, which is a yield-driven stablecoin, fully backed by collateral. This collateral for USD+ is rooted in DeFi strategies that generate returns. These strategies encompass lending to platforms like Aave, and include both stablecoin-to-stablecoin and neutral-risk strategies.

USD+ by Overnight Finance

USD+ is a DeFi product that offers users the opportunity to invest in a diversified basket of stablecoins. The main goal of USD+ is to optimize yield generation by allocating funds across various yield-bearing protocols and platforms in the DeFi ecosystem. In essence, users deposit their stablecoins into the USD+ pool and receive interest-earning USD+ tokens in return.

wUSD+ is a type of wrapped token within the Overnight Finance ecosystem. In simple terms, it represents a stablecoin (like USD+) that has been “wrapped” to create a new token that can be used within the Overnight Finance platform and potentially other decentralized finance (DeFi) platforms. This wrapping process allows for more fluid and flexible utilization of the stablecoin in various financial strategies and products, facilitating smoother transactions and broader integration within the DeFi space. It essentially helps in enhancing the functionality and interoperability of the original stablecoin, USD+.

Currently, Overnight Finance operates on multiple chains including Base, Optimism, and Arbitrum, with a significant amount of total value locked (TVL) across various products:

USD+: $21,772,869.93 TVL (Operates on Base, Optimism, Arbitrum, and others)
DAI+: $9,020,297.94 TVL (Operates on Base, Optimism, Arbitrum)
USDT+: $472,694.69 TVL (Operates on Binance, Linea)

OVN by Overnight Finance

OVN is the native token of the Overnight Finance protocol. It serves two main purposes: to promote the use of USD+, a yield-bearing stablecoin developed by Overnight, and to facilitate decentralized risk management within the protocol. OVN holders can participate in governance decisions, helping to align community incentives and guide the protocol’s development. Additionally, OVN will be used in Insurance Vaults, where it can be staked to earn insurance premiums and potentially benefit from upward price pressure due to the protocol’s revenue mechanisms. The token has a fixed supply of 1,000,000, with a detailed distribution and vesting plan to ensure the maximization of its value over time.

Motivation:

The motivation behind introducing this pair on Balancer stems from a variety of strategic benefits that this integration would bring to both communities:

  1. Enhanced Liquidity: The introduction of the OVN/wUSD+ pair on Balancer would significantly enhance the liquidity of these assets, facilitating smoother transactions and potentially reducing slippage.
  2. Increased Yield Opportunities: By leveraging Balancer’s flexible and dynamic liquidity pools, users can explore new yield-generating opportunities, thereby maximizing their returns on investment.
  3. Community Engagement and Growth: This collaboration would foster greater community engagement, bringing together the vibrant communities of both Balancer and Overnight Finance, and potentially leading to innovative developments and partnerships in the future.
  4. Strategic Alignment: The integration aligns with Overnight Finance’s strategy of expanding its ecosystem and enhancing the utility and value proposition of the OVN and wUSD+ tokens. It also aligns with Balancer’s goal of fostering a diverse and robust DeFi ecosystem.

Furthermore, to stimulate liquidity and encourage participation, the OVN/wUSD+ pair will be incentivized on the three chains - Optimism, Arbitrum, and Base. This incentive mechanism is designed to attract more users to the platform and foster a vibrant and active community around the OVN ecosystem.

Specifications:

  1. Governance: Information on governance Overview - Overnight Finance Docs (Beta)
  2. Oracles: Does the protocol rely on external oracles? No
  3. Audits: Audits
  1. Market History:
    Overnight Pulse on Beethoven Beethoven X | Overnight Pulse
    Overnight Pulse on Balancer Arbitrum Balancer

  2. Value: The pool is expected to generate trading volumes and fees for Balancer.The proposed OVN/wUSD+ pool aims to be a primary source of liquidity for both tokens, enhancing the stability and depth of the market on Balancer. We will also continuously incentivize the gauge to attract liquidity.

Contract Addresses:

wUSD+:
Optimism - 0xA348700745D249c3b49D2c2AcAC9A5AE8155F826
Arbitrum - 0xB86fb1047A955C0186c77ff6263819b37B32440D
Base - 0xd95ca61CE9aAF2143E81Ef5462C0c2325172E028

OVN
Optimism - 0x3b08fcd15280e7B5A6e404c4abb87F7C774D1B2e
Arbitrum - 0xA3d1a8DEB97B111454B294E2324EfAD13a9d8396
Base - 0xA3d1a8DEB97B111454B294E2324EfAD13a9d8396

Specifcations:

Network PoolId Root Gauge
Optimism 0x20CB4A1E7B607083F96C12BEAA61D60BD8757BC2000200000000000000000101 0x0b05E444Fab8Ae04C2da60F2Ba5B25bF0a132eFB
Arbitrum 0x6dee17e9e419de0a05d1cc9f015ba91072f845440002000000000000000004b5 0x37b1E1C000C3F0b6D5D73dFBC7397A4fB518Dc9f
Base 0x56570e81171de7f5610fdb23f519d62ab7fdc252000200000000000000000052 0x4C7730DEFfb57EED2e60262f9DAd4f96B8A00138

The Balancer Maxi LM Multisig eth:0xc38c5f97B34E175FFd35407fc91a937300E33860 will interact with the GaugeAdderv4 at 0x5DbAd78818D4c8958EfF2d5b95b28385A22113Cd and call the addGauge function for each of the pools, passing their corresponding Root gauge for the gauge(address) in the table above, and gaugeType(string) corresponding to their respective network in the table.

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I want to state that I am not very optimistic about these gauges. Main reasons are rather unprofessional business practices and bad treatment of LPs (we are making them whole as some LPs lost money). See [BIP-431] USD+ Linear Pool Refund

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I agree with Xeonus that given the timing of BIP-431, and the need for Balancer to step in and deal with this. It doesn’t seem an appropriate time to be requesting more gauges. Especially not ones that have more custom integrations such as rate providers.

It’s more important now than ever for the DAO to be thinking about risk management, both in terms of the internal operations and processes of the various SPs engaged and in terms of the how governance makes decisions around the code we integrate and the gauges we incentivise.