FDT / WETH 80/20 Gauge + Nested Pool Consideration

Summary:
The FIAT DAO community is proposing the following pools be given a veBAL gauge:

  • FDT/ETH
  • FDT/OHM-ETH-DAI
  • FIAT/staBAL3

Note that while the FDT/ETH pool has been set up already by the FIAT DAO community, the other pools, as they are nested pools, require deployment support from the Balancer team which is underway at the time of posting this proposal.

All pools should be deployed at the time, or shortly thereafter, when voting for this proposal starts ($FIAT launch is imminent). If need be, the two nested pools can be a separate proposal.

References/Useful links:

  • See Linktree due to forum link restrictions for new members

Protocol Description:

The FIAT protocol is a DeFi-native repo market solution for providing liquidity to holders of fixed income assets. It allows users of apps like Element Finance, Notional Finance, and Yield Protocol to bring their proofs of liquidity to the protocol in order to collateralize a debt position in $FIAT, a stable value asset. Our v1 has just launched, and it’ll look and feel familiar for users who have previously minted DAI, RAI, or MIM. By utilizing proven stablecoin mechanisms, the protocol is able to offer competitive borrowing power to holders of such collateral assets, allowing them to releverage fixed yields or meet current liabilities as the locked assets mature.

$FDT is the governance token associated with FIAT DAO. In its current iteration, $FDT confers voting power for users to participate in decision-making around protocol parameters. We are currently underway with an implementation of a v2 specification in which $FDT allows users to gauge behind supported collateral types in order to allocate a protocol backstop and inform algorithmic interest rates. We anticipate that the 80/20 FDT/ETH BPT will be the primary governance power-conferring asset in the updated DAO architecture.

Motivation:

FIAT DAO has expressed its desire to become a material player in veBAL governance going forward, as can be seen by a forum discussion accessible via the Linktree above. To achieve this, we are willing to commit DAO funds for the acquisition of voting power and the bribing of existing veBAL participants. For such strategies to have the greatest impact, we are keen to deepen $FDT secondary liquidity. Acquiring a veBAL gauge for the FDT/ETH pool, as well as for the FDT/OHM-ETH-DAI pool, will allow the DAO to move over existing protocol owned liquidity and engage in the Hidden Hand marketplace. As FIAT DAO proves itself a reliable partner to the Balancer ecosystem and the FIAT protocol gets more time in the wild, we hope to be in a position to conduct a DAO token swap at some point in the future as well.

Specifications:

  1. Governance: FIAT DAO is a completely on-chain organization, with no corresponding real world entity in place. The FDT token has been given away for free since November of 2021, and a DAO smart contract architecture has been live since December 2021.

  2. Oracles: $FDT is a standard ERC-20 DeFi governance token that comes with the volatility inherent to the sector. $FIAT is a DAI-like asset that will come to be backed by less liquid derivatives, but at the moment only supports collateral types with existing secondary markets.

  3. Audits: Audits of our protocol and our collateral oracle system can be found in the Security repo within our Github (again, see Linktree).

  4. Centralization Vectors: $FDT holders determine which assets are supported as collateral and the parameters associated with each.

  5. Market History: $FDT has been transferable since November 2021. It has struggled with liquidity due to a removal of liquidity incentives in February 2022 and routing issues on Uni v3 due to an unsupported OHM pairing.

12 Likes

Thanks for the post, one of the things I was going to ask about was the nested pools since that functionality was not yet fully rolled out on the platform, but it seems you are speaking to some of the devs on the work that is necessary to get that up and running. I would love to see nested pools get off the ground soon though.

Just as a side note, if this were to pass I think we would want to go back to the DAO multisig to turn the last two pools on once they were created. I look forward to see if anyone has any questions or comments.

In support! Excited to see what FiatDAO will bring to the fixed rate space.

Fully support this initiative and hope to see the proposal approved. I believe a repo market for fixed income assets is a needed product in the DeFi market that has long been awaited. This should feel complimentary to Balancer and a like minded partner. Let’s get this passed!

Thanks for the write-up @maxfiat - seems detailed enough and makes a case for the FDT/ETH pool. In favor!

sounds great! Lets do this

Fully support the proposal. Will be a win/win deal for Balancer and FiatDAO.

Let’s do it! Can’t wait

Thanks for the proposal, @maxfiat - happy to see more DAOs join Balancer governance.

I’ll note that while deploying nested pools would be trivial via scripts, supporting this kind of pool on the frontend is not in BLabs’s short term plans. Meaning LPs would not be able to invest/withdraw from these pools or trade against their liquidity via the Balancer app.

Moreover, based on my past experience aggregators are unlikely to support routing volume through them, as this would require joining/exiting the nested pool (eg to swap FDT for USDC you have to go FDT –swap–> staBAL3 –exit–> USDC).

For the reasons outline above, yes, I think it might make sense to take the two nested pools into a separate proposal when there’s more clarity around these points and how to address them.

hey @markus aren’t boosted pools also nested pools though? is this why we are not seeing more boosted pools on the frontend?

the routing is an issue indeed thanks for pointing that out. I guess this explains the low volume on boosted staBAL3 vs plain staBAL3?

we are reevaluating the strategy for bootstrapping FIAT liquidity and your inputs are highly appreciated!

Yes, but the UI was built in a very specific way to support bb-a-USD (“boosted staBAL3”).

Correct on both. Rearchitecting the frontend so that future nested pools can be supported automagically is in the roadmap, but unfortunately won’t be ready in the short term.

Thanks again for your feedback @markus. We agree with you that the nested pool conversation is best saved for a later conversation.

We’d like to move forward with a snapshot proposal for granting solely the FDT/ETH 80/20 pool a gauge.

3 Likes

I think bringing to a vote the FDT/WETH can be done asap.

I support the vote for this pool

1 Like

Sounds good. Please create the gauge via the LiquidityGaugeFactory | Address 0x4E7bBd911cf1EFa442BC1b2e9Ea01ffE785412EC | Etherscan and add its address to the proposal.

2 Likes

Here we are: Vyper_contract | Address 0xbd0dae90cb4a0e08f1101929c2a01eb165045660 | Etherscan

Much appreciated, Markus!

FDT/WETH gauge will go to a vote Monday afternoon EST

1 Like

https://snapshot.org/#/balancer.eth/proposal/0x7fd8f2fde791c11cd7a50a63b902bd4e800bdc7fe71bccb791db06bce18d2258

1 Like