[BIP-XXX] USD+/DAI+ and USD+/USDC Gauges on Arbitrum, Optimism, and Base with Uncapped Emissions

BAL Gauges
1

Summary:

We propose adding two new pools, USD+/DAI+ and USD+/USDC, on Balancer across Arbitrum, Optimism, and Base. These pools aim to enhance trading for everyday users and boost yields for investors. We’ll make Balancer our main platform and our core liquidity layer and plan to direct significant incentives in OVN to these pools. By ensuring these pools have no emissions cap and securing core status, Balancer will receive increased incentives from us in OVN. This strategy will not only benefit regular traders and yield-focused investors but also significantly strengthen the Balancer ecosystem.

We are modifying our rebasing mechanics in line with oUSD, enabling us to skim additional yield from regular pools to provide substantial bribes. This change specifically addresses the discontinuation of boosted pools and makes our proposed pools more sustainable.

By ensuring these pools have no emissions cap and securing core status, Balancer will receive increased incentives from us in OVN. This proposal represents a significant strategic move by Overnight Finance, showcasing an innovative approach to yield generation and liquidity enhancement that is expected to benefit not only regular traders and yield-focused investors but also both the Overnight Finance and Balancer ecosystems in the long run.

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.

DAI+ is the equivalent of USD+, pegged to DAI 1:1. DAI+ consist of aDAI (Aave) and 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 (~$16m).

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. Our token has a cross-chain functionality with the help of Axelar.

OVN Tokenomics: Overnight Tokenomics ($OVN)

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. Ease of Trading: The USD+/USDC pool aims to simplify and enhance the trading experience for regular users, ensuring efficient and seamless transactions.
  2. Maximizing Yield: The USD+/DAI+ pool is strategically designed to offer the highest yield potential, catering to yield-focused liquidity providers.
  3. Strengthening the Ecosystem: By introducing these pools with uncapped emissions and requesting core status, we aim to significantly boost the liquidity and functionality of the Balancer ecosystem.
  4. Enhanced Liquidity: The introduction of the additional pools can attract more liquidity providers, hence making the Balancer ecosystem more robust.
  5. 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.
  6. 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.
  7. 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 USD+ tokens. It also aligns with Balancer’s goal of fostering a diverse and robust DeFi ecosystem.

Furthermore, to stimulate liquidity and encourage participation, the suggested pools 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.

We aim to create a competitive environment that rewards participation and ensures the most efficient allocation of resources. We believe that veBAL voters are sophisticated and discerning and they will prioritize the community’s best interest. Complexity is often a byproduct of innovation. Our past experiences teach us valuable lessons, enabling us to build more robust systems.

The proposal aims to push the boundaries, capitalize on new opportunities, and ensure the best outcome for the community. We trust the veBAL voters to recognize the merit and long-term vision of this initiative.

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:
    USD+ Pools on Different Chains: Overnight Pools
    Velodrome: USD+/USDC, USD+/DAI+, USD+/FRAX, USD+/DOLA, USD+/LUSD
    Aerodrome: USD+/USDC, USD+/DAI+, USD+/DOLA
    Curve: USD+/crvUSD
    Thena: USD+/USDT

  2. Value: The pool is expected to generate trading volumes and fees for Balancer.The proposed pools 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:

USD+:
Optimism - 0x73cb180bf0521828d8849bc8CF2B920918e23032
Arbitrum - 0xe80772Eaf6e2E18B651F160Bc9158b2A5caFCA65
Base - 0xB79DD08EA68A908A97220C76d19A6aA9cBDE4376

DAI+:
Optimism - 0x970D50d09F3a656b43E11B0D45241a84e3a6e011
Arbitrum - 0xeb8E93A0c7504Bffd8A8fFa56CD754c63aAeBFe8
Base - 0x65a2508C429a6078a7BC2f7dF81aB575BD9D9275

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

Overnight Bribing Plan

We have developed a bribing plan for the USD+/DAI+ and USD+/USDC pools on Balancer across the Arbitrum, Optimism, and Base networks, as part of our initiative to make Balancer our core liquidity layer. Central to this plan is our modified rebase mechanics, which allow us to skim rebases from Balancer’s regular, non-boosted pools.

This innovative approach provides us with additional yield, which we will channel back into the pools as significant bribes in OVN. Our goal is to substantially boost liquidity in these pools, drawing a wide range of liquidity providers and enhancing the overall value and stability of the pools. By doing so, we aim not only to benefit our platform but also to contribute significantly to the strength and growth of the Balancer ecosystem. This strategy is a reflection of our commitment to a strong, mutually beneficial relationship with Balancer, ensuring a prosperous environment for all parties involved.

2

Hi there

Thanks for the proposal. In general we are very happy that you are choosing Balancer as your primary liquidity hub. However, I have some questions / concerns that would be great if they could be addressed:

  • So far OVN/wUSD+ gauges farm significant rewards from our ARB STIP program while only providing minimal returns to the DAO. It seems most of the liquidity in the pool is protocol owned by OVN. Can you clarify what the plan is here? So far we are emitting a lot of rewards while the DAO gets very little in return. Let’s say these gauges are very capital inefficient. In that regard, how would you feel if we would exclude Arbitrum for now as that STIP is very important for Balancer’s success and currently it is not clear how OVN can add value to that narrative
  • Would it be possible to implement rate providers for your tokens? In that sense both protocols could benefit much more: the DAO earns fees on your yield bearing USD which we can use to recycle in our voting incentive program.

Could you also explain more how this mechanism would work?

We have developed a bribing plan for the USD+/DAI+ and USD+/USDC pools on Balancer across the Arbitrum, Optimism, and Base networks, as part of our initiative to make Balancer our core liquidity layer. Central to this plan is our modified rebase mechanics, which allow us to skim rebases from Balancer’s regular, non-boosted pools.

This innovative approach provides us with additional yield, which we will channel back into the pools as significant bribes in OVN. Our goal is to substantially boost liquidity in these pools, drawing a wide range of liquidity providers and enhancing the overall value and stability of the pools. By doing so, we aim not only to benefit our platform but also to contribute significantly to the strength and growth of the Balancer ecosystem. This strategy is a reflection of our commitment to a strong, mutually beneficial relationship with Balancer, ensuring a prosperous environment for all parties involved.

From what I gather here, it sounds like you want to control the rebasing rewards and distribute as voting incentives yourself? Did I understand that correctly? If yes, then this is not something I am too excited about. This process should ideally be permissionless.

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