[BIP - XXX] Enable BRZ-jBRL Stable Pool Gauge with a 2% cap (Polygon)

Summary:

Enable a Balancer gauge for the BRZ - jBRL stable pool (coined 2brl) on Polygon.

BRZ and jBRL are both Brazilian Real stablecoins. BRZ is backed 1:1 by Brazilian Real (BRL) and issued by Transfero. jBRL is backed by various collateral types (BRZ, USDC, etc.).

Jarvis Network and Transfero co-write the proposal.

References/Useful links:

Jarvis Network:

Link to:

  • Website: jarvis.network
  • Documentation: (can’t put 2 link in a post because I am a new member)
  • Code: (can’t put 2 link in a post because I am a new member)
  • Social: (can’t put 2 link in a post because I am a new member)
  • Audits: (can’t put 2 link in a post because I am a new member)

Transfero:

Link to:

  • Websites: transfero.com
  • Social: (can’t put 2 link in a post because I am a new member)
  • Audits: (can’t put 2 link in a post because I am a new member)

Protocol Description:

Jarvis Network

Jarvis Network is an ecosystem of protocols and applications to bring decentralized finance to real use cases. Its first protocol, Synthereum, allows borrowing and exchanging synthetic fiat currencies (jFIATs) on multiple EVM-compatible networks.

The Synthereum protocol has four modules:

  • Liquidity Pools: exchange jFIATs back and forth for USD-stablecoins or other jFIATs without price impact at the Chainlink price feed.
  • Credit Lines: borrow jFIATs against various collateral types.
  • Wrappers: convert non-USD stablecoins for their jFIATs equivalent at a 1:1 ratio.
  • Printers: mint uncollateralized jFIATs for flash loans, seeding money markets, or liquidity pools.

Most jFIATs have a fiat on and off-ramp (Mt Pelerin), can be lent or borrowed on money markets (Midas), can be used for on-chain and off-chain payment (Request, Superfluid, Mt Pelerin) or for earning yield (Beefy).

Transfero

Transfero Group is an international financial solutions company based on blockchain technology in the Crypto Valley, Switzerland. Its objective is to connect emerging countries to the global market through a platform of financial solutions based on blockchain infrastructure, providing greater efficiency, flexibility, and access for people and businesses.

Transfero also developed BRZ, a stablecoin backed 1:1 by Brazilian real (BRL), to give South Americans a reliable asset to the blockchain industry. The BRZ token is live on Algorand, Binance Smart Chain, Ethereum, Solana, Polygon, and Stellar. BRZ was featured in a World Economic Forum panel in 2020.

BRZ is integrated with fiat on and off-ramp (BityPreco) and crypto-card solutions (Wirex) and can be borrowed and lent on money markets (Midas).

Motivation:

The role of the 2brl pool is to increase the stability of BRZ (1), the on-chain liquidity of both BRZ and jBRL (2), and connect the Transfero and Jarvis ecosystems (3). Together, these 3 points allow for building a Brazilian DeFi ecosystem.

  1. BRZ peg: since jBRL can be exchanged for USDC back and forth at the BRLUSD Chainlink price feed and without price impact, arbitrages can be performed between the Balancer pool and the Jarvis Liquidity Pool to help maintain the BRZ peg.

  2. On-chain liquidity:

  • BRZ: since jBRL can be exchanged for USDC without price impact, then exchanging jBRL or USDC for any other token has the same price impact; users can swap BRZ to jBRL and then to USDC to access the latter’s liquidity or vice versa.
  • jBRL: jBRL main liquidity source is the Jarvis Liquidity Pool (primary market); without entering too many details, if the pool performs well, it will increase the number of jBRL minted, which will increase the liquidity in our Liquidity Pools and our Wrappers; also, it is essential to us to have more liquidity sources (secondary markets); this is why we are launching this pool as well as other pools (jBRL-USDC and jBRL-ETH, but this will be for another proposal).
  1. Connect ecosystems: the 2brl pool connects Transfero and its BRZ (essentially a fiat on and off-ramp for Brazilian DeFi users) to the jBRL’s ecosystem, enabling multiple use cases.
  • Credit without FX risk: borrow jBRL, swap for BRZ, then redeem BRL.
  • DeFi on-ramp: use BRL to mint BRZ, then access yield or on-chain liquidity.
  • Remittance: connect BRZ fiat on and off-ramp to any other jFIAT or USDC fiat on and off-ramp (we already performed payments between Brazil and Mexico and Brazil and France on the BNB Chain).

A few notes:

  • Jarvis LTD has started building a position in BAL and AURA. The Jarvis Network treasury (governed by the JRT token, which will soon be revamped using the ve-model, a new token called JARVIS, and an 80/20 JARVIS-ETH pool) is planning on building the same position.
  • Jarvis LTD and the Jarvis Network treasury will both supply liquidity in the Synthereum Liquidity Pool. They will use up to 50% of the fees generated through the Liquidity Pools to bribe veBAL voters (we have already done this successfully for a few months now on BNB Chain with Ellipsis / DotDot).
  • Moving forward, we will deploy a boosted pool using Midas whenever possible to avoid fragmenting the liquidity between AMM and money markets and earn higher real yield.
  • This proposal is the first of many, as Jarvis Network is moving all their liquidity pools from Curve (stable pools) and Uniswap/Sushiswap/Kyber (volatile pools) to Balancer.

Specifications:

  1. Governance:
  • Jarvis: no on-chain governance (vote via snapshot) and decisions are executed through a ⅝ multi-sig (only one team member in the signers).
    • Polygon: 0x2709fa6FA31BD336455d4F96DdFC505b3ACA5A68
    • Ethereum: 0x2CA74be68f0A0e053F030D143C1376806BaBEdc9
    • Gnosis Chain: 0xaE1026699f47B1fC572D65E1784b12c3A2574A25
    • BSC: 0x38329F26a075D53324EFd6e5F53869354Fa1cfBc
    • Avalanche: 0x2507A0d8E2aBe9464Ba2d9ddcA38A5ee5e60A434
    • Optimism: 0x40bd131fA9933D592344783E38f0c0F27767d9FA
  • Transfero: centralised entity.
  1. Oracles: jBRL uses BRLUSD Chainlink price feed; BRZ token does not have a price feed
  2. Audits:
  1. Centralizing vector: jBRL is mainly collateralized by USDC; BRZ is a fiat-backed stablecoin issued by a centralized entity.
  2. Market history: jBRL has been live since February 2022 (on the BNB Chain); it has traded a bit off its peg during the FTX crisis due to a too-high supply of jBRL on a money market vs. a too-low number of jBRL minted through the Liquidity Pool (the number of jBRL that you can sell in the Liquidity Pool = the number of jBRL that people has bought; so people borrow a lot of jBRLs from the Credit Line or which have been minted through the Printer, and sell them all through the Liquidity Pool, it can prevent other jBRL holders from selling jBRLs through the pool, preventing any arbitrages from happening). We have solved the issue by withdrawing jBRL from the money market, forcing users to repay their loans by buying jBRL from the Liquidity Pool. At the same time, BRZ had an issue with its peg because its primary off-chain market was on FTX, and the pool used a wrapped BRZ from Solana. Besides last week’s event, both stablecoins have maintained their peg since the pool launch (on the BNB). We have learned how to prevent these situations from happening again or fix them quickly. Two other rare cases can prevent users from buying jBRL from the Liquidity Pools (again leading to preventing arbitrages from happening), and we also know how to mitigate them (currently working on it as we speak).
  3. Value:
  • The 2brl pool will act as the main route for arbitrages and the use cases mentioned above (on-chain liquidity, credit without FX risks, etc.).
  • It will be our first step toward moving our ecosystem to Balancer’s.

Contracts

  • 2brl Balancer Pool (Polygon): 0xE22483774bd8611bE2Ad2F4194078DaC9159F4bA (AMP 200 because both tokens are redeemable).
  • jBRL token (Polygon): 0xf2f77FE7b8e66571E0fca7104c4d670BF1C8d722
  • jBRL (Polygon Synthereum Liquidity Pool): 0x30e97dc680ee97ff65b5188d34fb4ea20b38d710
  • BRZ token (Polygon): 0xf2f77FE7b8e66571E0fca7104c4d670BF1C8d722
  • Gauge: 0x5aeB4e367060EE08F37a7c65F57bA9f1C1895F92
3 Likes

Have you considered pairing 2BRL and bb-am-USD in a weighted pool and requesting a gauge to that instead? It would increase “brand awareness” for 2BRL and connect jBRL and BRZ liquidity to the rest of the protocol, increasing swap fees for LPs.

2 Likes

Hey Markus, it actually is a good idea, I did not think about it.

The only downside is the exposure to USD, even in a weighted pool.

Is there a routing logic to swap jBRL for USD stablecoin, if we pair the 2brl to bb-am-USD? Or should it be built externally?

Also, I don’t know if you saw but moving forward the plan is to only use boosted pool (we also have jBRL-USDC and WETH-jBRL pool on Balancer).

Yes, routing logic would be handled by the SOR and supported by all the large aggregators

1 Like

Awesome! thx.

So our initial plan was actually to launch a 2brl pool + a jbrl-usdc pool, but the best path moving forward could be 2brl + 2brl-usd pool (with “usd” being a boosted USD pool). We would still need two gauge cause some LP would prefer to only have a BRL exposure.

Feel free to create the weighted pool and the associated gauge and amend this proposal. When it goes to snapshot it will be split in two votes, one for each gauge.

On it!

bb-am-USD contains USDT, we try to stay out of it usually. There is also a bb-am-USDC pool, but I assume the best for the protocol would be the bb-am-USD.

Could there be a way that 2brl-bb-am-USD also earn the staking rewards of the bb-am-USD? I know rn it is not possible since you need to stake the BPT, but if we build a custom contract which stake/unstake at each trade, could it work with the SOR?

IMO you’re right: for the protocol, focusing on bb-am-USD is better because it avoids fragmentation (more depth, more swap revenue). Also the combined yields are higher than USDC’s alone. But I understand the aversion to USDT. At the end of the day you’ll have to estimate how much liquidity the pool can attract, how much incentives it could get (if weighted 50/50 IIRC it qualifies for core pool status under BIP-19), and run your own risk-return analysis.

I don’t think something like that would be possible in the way you describe it. The pool doesn’t hold its underlying tokens, it’s all held by the vault. So I think you’d need an asset manager on top of the pool to do that, or use the gauge token as the base token (bit of an UX nightmare) and do your own accounting of incentives earned inside the pool. Optimistically, something this complex would take us a while to verify before we are comfortable integrating it into the ecosystem. Realistically, given other priorities I don’t think any of the teams would have the bandwidth to do it until the pool proves itself in the wild, but those are just my own views.

1 Like

Thanks Markus!

I have deployed a 2brl-bb-am-usd pool (Balancer).

We will launch a gauge for this pool tomorrow.

1 Like

Hi psdcltllrd,

I have looked for Transfero’s proof of reserves for BRZ and could not find it. The only statement that I can find is some risk disclaimers when I click on proof of funds on brztoken.io navigation (see below).

Secondly, can we get a report on BRZ losses on FTX? Another stablecoin issuer who was market making on FTX posted losses around 2 mil USD.

Would like to see some financial statements & audit reports rather than rely on a chain of trust if available.

Thanks.

2 Likes

Hey! I asked someone from Transfero to come answering these questions better than I would.

Gauge deployed for 2brl-bb-am-usd: 0xE77239359CE4D445Fed27C17Da23B8024d35e456

Hi everyone, I’m the head of Defi for Transfero and I would like to relay a response directly from our CFO (Carlos Russo);

"The BRZ token is issued by Transfero, a licensed institution in Switzerland, and it is mostly backed by BRL denominated bonds issued by the Brazilian Government. The BRZ token is a stablecoin pegged to the BRL and can be redeemed by 1 BRL in Brazil or by the equivalent amount of USD or USD stablecoins abroad. For this reason, part of the collateral might be held in either USD cash and cash equivalents or USD stablecoins.

Since the BRL is a non-deliverable currency, The BRZ is mostly used by Transfero’s Enterprise Clients as an alternative to move BRL internationally. Although originally meant to cater to institutional clients, it can be held by individuals through partnerships between Transfero and several financial or crypto platforms.

Considering the potential of our stablecoin in the DeFi space and the market demand for that, Transfero is committed to provide proof-of-reserves as soon as the next month, although it has no legal obligation to do so.

With regards to the potential impacts of FTX and Alameda in our activity, Transfero had no relevant financial exposure to these firms. Transfero has developed a payments solution through APIs named “Transfero Payments” that FTX had been using as a customer for the last two and a half years. The Transfero Payments solution was used by FTX and is used by other competitor exchanges and has not experienced any interruptions during this period.

Also, Alameda was an institutional client of Transfero and carried out the Market Making on BRZ pairs at FTX. As one of the largest liquidity providers in the market, Alameda also bought and sold BRZs in spot trades with Transfero, an ability that other market makers and institutional liquidity providers also have with the company. Such players are part of the same terms of use as all our institutional clients."

1 Like