FIP-10 - Curve Integration
Status: Stage 0 - Discussion
- This proposal formalizes Curve integration with Fei and opens up the Fei-3Crv pool to the wider community.
- This thread also opens for discussion whether Fei Protocol should supply additional liquidity to the pool by providing additional 10k ETH (~4% PCV) to the underlying assets (Fei + 3Crv) and accruing yield back as revenue;
- This thread also opens for discussion the amount of TRIBE incentives to be provided into this pool.
- This thread starts a discussion on all of the above as a temperature check before advancing to Stage 1 (Snapshot Proposal).
With most of the major bugs plaguing Fei out of the way and the recent successes with CREAM and Rari, further integrations with other major protocols will help drive Fei usage. Curve is one of the largest DEXes in the DeFi space with over $6.6B per Defi Pulse and major stablecoin throughput, Fei should also benefit with this integration to drive growth and further use case and adoption.
Per discussion with Joey, he has signaled support for this integration and the Fei-3Crv metapool has actually been created some time ago with approximately $550k of liquidity, but not currently initialized and made available on the Curve UI. External Addresses
Thus, opening it up for all to use creates the following benefits:
- Allows Fei holders to create yield based on the 3Crv assets;
- Allows indirectly, a stablecoin diversification of the PCV;
- Allows a wider use base for Fei;
- Allows indirectly, a liquidity provision to other stablecoins, but as a consequence, opens up exposure to centralized stables (USDT/USDC)
One aspect that is open to discussion at this stage is whether Fei Protocol should provide additional liquidity. This would mean taking some additional ETH assets to either:
- Directly converting/buying 3Crv and supplying to the pool;
- Depositing ETH to a 3rd party protocol (eg Aave) and using ETH as collateral, borrow to provide the 3Crv liquidity required.
Per the model in another proposal written by @Bruno on Lido Staking, I propose that we draw down 10k ETH (about ~4% of PCV, or $20M at ETH $2000 as of this writing), which gives us sufficient amount of leftover reserve of PCV for peg maintenance. This amount is subject to discussion and can be further adjusted with DAO votes to raise/lower the cap.
Based on our initial discussion on Discord, the Core Team has been working on some code to allow TRIBE rewards to be diverted. In order to bootstrap liquidity provision, I propose that some amount of TRIBE rewards should be used to incentivize this pool, with the intent that the rewards emissions be tapered as time goes on. We can use part of the Treasury to fund the rewards scheme.
Also, the 3Crv pool itself has some nominal yield, so 50% would go directly to Curve DAO while the remaining is retained for Fei Protocol, which can be used for revenue generation for the PCV, with further dividends to TRIBE holders in the future.
Timeline for Implementation
However, please note that per Joey, any code finalized for this process will take about a month, so realistically any formal implementation of this Integration will take place early August at the earliest.
As always, open to feedback for any comments.
- Yes, the PCV should be used to buy 3Crv directly (PCV Diversification)
- Yes, the PCV should be used to borrow 3Crv using ETH as collateral (PCV Borrowing)
- No, do not utilize the PCV
- Yes - how much to be incentivized would be further discussed
- No - do not incentivize this pool