I’ve noticed that ShezmuUSD, a stablecoin by Shezmu, has recently been added to the core pool of Balancer. This prompted me to take a closer look at their protocol, and I quickly identified some red flags. The majority of their stablecoin supply (around 500K out of 667K) is issued against their own NFT, which is itself issued by locking up their own token. This setup immediately raised concerns for me, as it reminds me of the issues we saw with old USDM.
Digging further, I came across a wallet (0x38B6C456Cb66A0AbCf604b6E1E0B0eE7DD988b87) that appears to belong to the Shezmu team. This wallet is used for their buybacks and currently holds around 300K of ShezmuUSD debt, which is already past the liquidation price. When I reached out to their Telegram group for clarification, they assured me that this wallet is used for buybacks and that there’s nothing to worry about. However, I remain concerned.
Currently, ShezmuUSD is trading above its peg, and the promise of high yields has attracted many users. But from what I can see, there doesn’t seem to be enough backing assets, which could be risky for the Balancer community. Given these concerns, I believe we should seriously consider whether it’s in Balancer’s best interest to continue supporting this gauge—or if it might be wiser to remove it before it potentially becomes a liability.
What do you all think? Should we kill the gauge or not?
