[RFC] Change veBAL USD yield component


  • This proposal concerns changing the token used to pay out the USD portion of the fees to veBAL lockers, currently paid out as bb-a-usd:

  • It suggests paying out as one of

    • new bb-a-usd (Aave v3)
    • nonboosted USD 3pool
    • wstETH/ETH
    • wstETH/bb-a-eth (Aave v3)
  • At the bottom of this post there is a survey to ask protocol participants what they would prefer.

  • It provides some background and clarity around the current state of protocol fee handling, as determined by various past governance actions.

Note to integrators

This change may require integrators building on top of veBAL, or derivatives of it to make changes. We are trying to reach out to all integrators and inform them of this change, and will not make changes sooner than the first of June. Please drop a comment here if you have concerns or would like to talk to us about handling this change.

At least 3 weeks will be given from the time of the start of this snapshot until the time the fee token is changed in order to allow time for integrators to change.


Fee Handling at Balancer

veBAL lockers are entitled to 65% of the protocol fees collected by the Balancer Protocol.

For pools designated as Core Pools these fees are paid out in the form of USDC incentives placed on Hidden Hand which can be earned by veBAL lockers by voting on the pools that generate these fees.

For other pools (no yield baring component or exceptions for ve8020), these fees are paid out as claimable rewards for veBAL lockers. In this case, all BAL is paid out as BAL, and all other tokens are currently sold for the old bb-a-usd and paid out as such.

Retirement of bb-a-usd

The bb-a-usd token currently paid out to veBAL lockers as protocol fees has been deprecated due to the following reasons:

  • Aave has moved to a v3 market, and this pool is based on V2
  • This pool is in recovery mode since February due to this Reentrecy Vulnerability.
    • Only proportional deposits and withdraws. (gas heavy)
    • No protocol fees taken/no longer core pool.

Scale of the matter at hand

The final results of fee handling are tracked here. Over the last few months, the portion of fees in question has ranged from $50k to $175 per 2 week period. With around 10 million veBAL in circulation, valued at $16 each. Hence best case scenario:

(150,000 USD per period *26 periods per year) / (10,000,000 veBAL * 16 dollars per) = 3.25% ROI paid in USDC.

The Proposed change

This proposal suggests moving the USD fee payment away from the retired bb-a-usd, and seeks to first explore a few options:

  • 3pool BPT: Allows single asset deposits/wd, simple pool with no boosted mechanics but lower protocol fees/no core pools redirection.
  • bb-a-usd(v3) BPT: Composable Boosted 3 pool offers higher rewards than the unboosted 3pool by staking much of the deposited balance on Aave v3.
  • wstETH/ETH BPT: Simpler ETH pool with slightly lower rewards due to the lack of Aave staking, but no linear pools/less complexity and risk.
  • wstETH/bb-a-eth BPT: Fully boosted ETH pool. This also offers more protocol fees and core pool dynamics based on the both the wstETH component, and the staking of most of the ETH side on aave v3.

Looking for Input

What token should be emitted for the USD portion of veBAL fee sharing
  • unboosted USD 3pool
  • bb-a-usd (aave v3)
  • wstETH/ETH
  • wstETH/bb-a-ETH (aave v3)

0 voters

Next Steps

After some time to discuss/collect input, a BIP will be staged to change the fee token to the option the community seems to prefer.

1 Like

Will close up the poll next Monday and make a BIP with the winner if there is no discussion.