[BIP-XXX] Enable Tetubal/20WETH-80BAL-Gauge (Ethereum)

[belbix]

PR with multisig payload

Summary

The Tetu Protocol has been actively building within the Balancer ecosystem, with tetuBAL serving as its primary Balancer-focused product. The aim of tetuBAL is to provide Polygon users access to the yields of Balancer, without the hassle of bridging or incurring in high gas fees. Recently, in line with its strategic long term vision, Tetu deployed on the Ethereum Mainnet, to offer its users the benefits of its cutting-edge strategies with a deeper liquidity provision.

In order to further boost liquidity for Balancer and secure more permanently locked veBAL, Tetu is requesting the whitelisting of its mainnet tetuBAL gauge. This will incentivise users to maximise their locking boost and contribute to the overall success of the platform. The inclusion of Mainnet tetuBAL gauge will further strengthen the partnership between Tetu and Balancer, and help to position both protocols as leaders in the DeFi market.

References/Useful links:

• Website - https://tetu.io/ 2

• Documentation - Introduction - Tetu

• Github Page - Tetu · GitHub

• Communities - Tetu

Protocol Description

Tetu is an asset management protocol that implements automated yield farming strategy for users.

Motivation

Tetu has a vision of becoming an integral partner for Balancer and continuing to develop innovative products that increase liquidity and solidify the protocol’s place as a cornerstone in the rapidly expanding DeFi landscape. To reach these goals, Tetu realises the importance of expanding its reach to the Ethereum Mainnet, which has a much larger audience than Polygon and a substantially higherl user base.

In alignment with Balancer’s long-term vision, Tetu’s expansion strategy includes offering tetuBAL in order to take advantage of the potential of perma-locked veBAL. This will allow Tetu to create new solutions that maximise the return on investment for Balancer and Tetu’s end-users. By providing perma-locked veBAL, Tetu can enjoy the necessary stability to build a strong and sustainable partnership with Balancer.

Moving to the Ethereum Mainnet is a crucial step in the long-term growth and success of Tetu. By accessing a much larger pool of users and partnering with Balancer, Tetu will be able to offer even more comprehensive strategies.

We believe that Tetu’s move to the Ethereum Mainnet represents a significant opportunity to further grow and expand both protocols and to provide users with the best possible opportunities. By leveraging the potential of perma-locked veBAL and partnering with Balancer, Tetu is poised to become a leader in the DeFi market and to make a lasting impact on the Balancer ecosystem.

Specifications

1. Governance: Multi Sig - Tetu
2. Oracles: No
3. Audits: docs.tetu.io
4. Centralization vectors: n/a
5. Market History: Tetu token can be volatile in the certain market conditions.

Balancer

uncapped gauge: 0x45280c7FE46Bd875E23D3820e89daA4C70fA2C34

[Xeonus]

Edit: removed vote based on community feedback. Further discussions are needed. See below.

[Tritium]

I’d like to see the current tetuBAL being trading a bit more in balance and having an A-factor more fitting for a liquid locked token before thinking about additional tetuBAL gauges.

It is still my opinion that the purpose of stable pools is to hold a balance of tokens, and that the way Tetu is using a pool with a high a-factor and a looper to lock more tokens while providing less liquidity (and thereby potential for revenue) for Balancer isn’t something we should continue to support with additional gauges.

I’d still like to see something done to bring the polygon pool into balance, before considering additional tetuBAL gauges and/or this vote to instead be to move from the polygon gauge to a new gauge with a lower a-factor and a plan around how peg could be maintained.

[Xeonus]

I have to agree with @Tritium on this critical point. We already signaled that we are worried about how the A-Factor is handled on Polygon in this thread

From my perspective it was simply brushed off as “it’s fine” - until it isn’t.

It is not ideal how this vote was quickly moved to snapshot - I also take partly blame for that.

In terms of ecosystem benefit of a similar gauge on Polygon: fees are microscopic:

In regards to token balance and health: not looking great and healthy at all:

It’s basically 8.86:1 ratio of tetuBAL vs 20WETH-80BAL tokens with a mere holders count of 24!

See historical performance here: Balancer Analytics

In terms of historical fee performance, this pool sits at position 52 while receiving one of the highest emission rates across polygon:

As it currently stands, I cannot support this gauge given my initial worries with the Polygon gauge.

[Zarigis]

I’ll bring up the same point I made in the other thread: for liquid staking assets you need to consider the total exit liquidity of the token, irrespective of how much of the liquid staking token happens to exist in the pool at any given time.

At the moment, there is 61.5k BALWETH in the tetuBAL LP, out of approximately 545k tetuBAL in total. This means that there is about 11% of BALWETH exit liquidity vs. the total tetuBAL supply.

For auraBAL where is approximately 450k BALWETH in the LP, out of approximately 2.78m auraBAL in total. This means that there is about 16% of BALWETH exit liquidity vs. the total auraBAL supply.

Yes, tetuBAL is lower than auraBAL by this measure, but it’s certainly not as extreme of a difference if you just looked at the auraBAL LP vs. the tetuBAL LP.

The only difference is that auraBAL has a single-staking vault, which absorbs a lot of the supply. Tetu has simply opted to not have a single-staking vault and instead leave the entire supply in the LP.

There is no practical difference between the two in terms of the actual available exit liquidity.

By requiring that Tetu move its pool “in balance” you are effectively demanding that tetuBAL have far more exit liquidity (as a percentage of the total supply) than auraBal.

[Tritium]

@Zarigis

I’ll bring up the same point I made in the other thread: for liquid staking assets you need to consider the total exit liquidity of the token, irrespective of how much of the liquid staking token happens to exist in the pool at any given time.

Yes but your are speaking in terms of the HODLer not the AMM. For Balancer the protocol, and for veBAL holders, actually important is a reasonable amount of revenue generated from trading volume or staking vs the emissions going to a gauge.

A pool that is intentionally kept off peg to maximize voting rights and veBAL returns while at the same time leaving the pool in a state where it is not really able to trade/fulfill it’s designed purpose is not good for the Protocol, nor is it using the pool math for it’s desired intent.

@Zarigis

For auraBAL where is approximately 450k BALWETH in the LP, out of approximately 2.78m auraBAL in total. This means that there is about 16% of BALWETH exit liquidity vs. the total auraBAL supply.

AURA is minting tons of tokens that add huge value to the veBAL ecosystem. On mainnet, right now, staking on AURA yields a higher percentage ROI in AURA than BAL while. Further, the auraBAL pool is making up about 1% of systemwide revenue and AURA/ETH pairs another 6 or 7. AURA is also doing great bizdev work and onboarding more and more “hot” projects, many of which have the potential to grow and pay good revenue into the system AURA brings liquidty at work, the liquidity at work brings fees for the DAO.

So Aura is currently contributing more emissions value than Balancer, and providing more well over 5% of revenue. It’s a boon for Balancer. One can’t expect every protocol to be so good to us, and these times of high AURA emissions won’t last forever, but in terms of what balancer governance should care about, it’s really not the small difference in exit liquidity for locked BAL. It’s more the transformational value being added to our gauge system and therefore protocol revenues.

@Zarigis

By requiring that Tetu move its pool “in balance” you are effectively demanding that tetuBAL have far more exit liquidity (as a percentage of the total supply) than auraBal.

It’s more that I would either like to see pools being used in the ways intended, or being experimented with in a way that drives value to Balancer and demonstrates how others could do the same. I don’t think tetuBAL LP is doing that right now. Maybe it makes sense to rethink some of your protocol decisions based around feedback from Balancer governance (pay more in somehow). I think most other people here would echo these desires and this view of what healthy gauges in our ecosystem look like.

[Zarigis]

You’re bringing up a lot of points that, while perhaps valid, are somewhat conflating the issue. I think there is a valid, separate discussion about gauge eligibility based on how much revenue the pool is generating and the contributions of Tetu to the Balancer ecosystem, but that isn’t the discussion I’m trying to have. I’m simply addressing the question of whether or not having a high A value for a liquid staked asset pool is appropriate/safe.

A pool that is intentionally kept off peg to maximize voting rights and veBAL returns while at the same time leaving the pool in a state where it is not really able to trade/fulfill it’s designed purpose is not good for the Protocol, nor is it using the pool math for it’s desired intent.

The pool is not “off peg”, the pool is imbalanced because there is nowhere for the tetuBAL to go if people don’t want to use it for voting rights/bribes. The high A value allows the pool to still be used for swaps despite this imbalance. I still don’t understand the objection, given that the pool continues to function for swaps.

Yes but your are speaking in terms of the HODLer not the AMM.

I don’t know what point you’re trying to make here. For liquid staked assets the AMM is purely intended to provide the ability for holders to exit. For auraBAL, large holders are going to balance their deposits between the LP and the single-staking vault so that the yields even out. The distinction between being in the AMM vs. in the single-staked vault is purely academic.

So Aura is currently contributing more emissions value than Balancer…

This is not relevant at all if we’re just trying to discuss what represents a healthy LP for a liquid staked asset.

It’s more that I would either like to see pools being used in the ways intended…

The pool is still usable in its current state. If we dropped the A value and added a single-staking tetuBAL vault, the total exit liquidity would be unchanged, and the trading volume would be unchanged. The only effect would be that a bunch of the TVL from the pool would go to the single-staking vault. The high A value simply means that the tetuBAL can exist in the LP and not require a separate vault. This is the exact same logic behind 80/20 weighted pools, and if it were possible to have an 80/20 stableswap pool then we would do that instead of using a high A value to approximate one.

Again, the total exit liquidity is comparable (proportionally) to auraBAL, and I don’t accept the argument that it’s fine in their case but not in Tetu’s just because AURA is more directly involved in the Balancer ecosystem. I can understand that being an argument in itself against gauge eligibility, but it has no bearing on the health of the LP.

[Tritium]

@Zarigis

I don’t know what point you’re trying to make here. For liquid staked assets the AMM is purely intended to provide the ability for holders to exit. For auraBAL, large holders are going to balance their deposits between the LP and the single-staking vault so that the yields even out. The distinction between being in the AMM vs. in the single-staked vault is purely academic.

It all really comes down to this.

veBAL governors vote on gauges to try to generate value for themselves, either by creating a more robust vote market or by trying to find pools that will eventually result in more trading and or staking fees.

Stableswaps are supposed to allow deep trades without much slippage, and for that reason often have low fees and high volume. The Tetu pool can’t have the same amount of depth/volume per AUM as other stableswap pools, because it is is not balanced.

It does not make sense for veBAL governors to continue to vote on more pools like this, as they are being used in a way to maximize emissions and pool capture on the pool (it’s less attractive without clear exit liquidity) while minimising economic activities that pay dividends into the DAO.

You are coming to balancer governance asking for a gauge, so it seems reasonable that the conversation here should be about what’s good for Balancer more than about what your community decided they wanted to do.

@Zarigis

Again, the total exit liquidity is comparable (proportionally) to auraBAL, and I don’t accept the argument that it’s fine in their case but not in Tetu’s just because AURA is more directly involved in the Balancer ecosystem. I can understand that being an argument in itself against gauge eligibility, but it has no bearing on the health of the LP.

Again. I’m looking at fees paid in per emissions out (both current and potential in the future) and right now auraBAL is looking like one of our top performers, and tetuBAL is probably at the very bottom. Granted that doesn’t all have to do with the pool balance, but I think if that pool were balanced it would see more trading and perhaps tetuBAL would start to see some wider ownership.

I am well aware that you guys have other ways to deal with exit liquidity that you are talking about, but those methods don’t drive value to Balancer, and they require doing a lot of detailed research into tetu to understand what they are, if they are and how reliable they are. A stableswap that has had some deep liquidty and stayed reasonably balanced for a long time is something that people know how to assess, so it’s much easier to understand risk and make investment decisions (and therefore generate activity on the pool).

[ZenDragon]

I weighed in on the amplification factor in the previous conversation Xeonus mentioned, and to Tetu’s point the change would be muted or miniscule in comparison to what Tritium states above. Making changes to try and make this pool worth Balancer emitting rewards is so farfetched I would argue the juice is not worth the squeeze. This goes for a new gauge and the current one quite frankly.

I may have a more cynical mindset with this circumstance, but I feel this would open a weep hole for tetuBAL to receive more than the Peace Treaty’s agreed upon 17.5% emission cap. I may be taking a walk off the pier here, but I would be more comfortable with Tetu’s expansion plans as a whole if it weren’t net negative by such a huge margin for Balancer overall. Aura is bringing more value than its taking imo, but this can be argued I suppose. Without such an unwarranted amount of BAL going to Tetu, I wonder where this relationship would be.

Solution for me is either no gauge at all or make the current pool worthwhile with A factor, balance, (no looper?), volume, fees, curtailing emissions, really any means Tetu can take. Then if this value proposition turns out to have weight to it, come back and ask for this gauge.

[Tritium]

@ZenDragon

Solution for me is either no gauge at all or make the current pool worthwhile with A factor, balance, (no looper?), volume, fees, curtailing emissions, really any means Tetu can take. Then if this value proposition turns out to have weight to it, come back and ask for this gauge.

Another option, although Tetu needs to think about the effect on LPs, would be to retire the gauge on the current pool, and enable a new gauge on a new pool with A-factor under 50 (which seems like the best practice for a liquid locker that is trying to maintain balance between tokens in a stableswap). Under 10 would be better. I do think this pool would perform a lot better from a revenue perspective it was either a low A-factor stableswap, or even better something like tetuBAL/wstETH(or matic) in a reasonably balanced weighted pool.

Changing the current A-Factor would be very hard on current LPs in the pool and kind of removes, or at least greatly complicates their their decision about if/when/how they want to migrate and potentially take some IL hit.

I’d be more supportive of a ETH gauge, if it was part of governance to also replace the polygon gauge with a low a-factor stableswap, Also, as @ZenDragon pointed out, the peace treaty would need ot be amended to apply the current 17.5 humpy cap across both pools combined.

I’m not sure how the delegates that have the vote weight to actually make said decisions think about this.

[jollyroger]

Hi,

In my opinion, it would be sensible to allocate the 17.5% to two gauges instead of just one, meaning applying a revised soft cap to the tetuBAL gauge. Additionally, I suggest imposing a cap of 10% or even lower on all BAL liquid staking solutions, this is because I imagine that both Aura and Tetu could continue to expand their tetuBAL/auraBAL offerings to other L2s or vice versa.

If the aim is to generate revenue (as @Xeonus mentioned), and both Aura and Tetu plan to expand, then a cap would be a reasonable measure.

The A factor can be reduced to ease some concerns, a lower cap imposed on tetuBAL and in exchange Tetu gets a green light from the community to get a gauge on Ethereum.