UST Goes Interchain: Degen Strats Part Three

Disclaimer – I am a member of the TFL team.

UST liquidity cross chain continues to grow, especially on Ethereum. At the time of writing this the UST-3CRV pool sits at $430m and the Shuttle UST - MIM pool sits at $970m thanks to these two proposals. The UST-FRAX pool will be receiving a gauge soon adding further UST liquidity and bolstering the Terra ecosystem’s relationship with the Frax team. Alpha leak: FRAX will be adding UST as a collateral option in the near future.

UST :handshake: FRAX :handshake: MIM

Now that liquidity exists, it is time to bring awesome UST use-cases to Ethereum DeFi through a couple of initial integrations, along with special additions to Solana and Polygon.

Olympus DAO (Ethereum, Solana, Polygon)

Olympus, a decentralized reserve currency protocol based on the OHM token, is the pioneer of DeFi 2.0 and original rebasooooor (Ampl obvs doesn’t count). The founders of Protocol Owned Liquidity, allowing dApps to own instead of rent liquidity, has begun its interchain expansion through project Proteus along with Olympus Pro - bonds as a service to help any protocol own its liquidity. OHM has a Market Cap of $2.4B and treasury of $700m, one of the largest protocol treasuries in DeFi by far.

Olympus will be bringing OlympusPro to Terra protocols soon along with gOHM liquidity on Astroport.

This proposal asks the Terra community to partner with Olympus DAO in a few kick ass ways:

  1. Enable UST bonds on Ethereum OlympusDAO, this proposal has already passed on OlympusDAO’s own governance and will be timed with the release of gOHM on Terra
  • Olympus plans to make 3.3% to 5% of their RFV UST which means 7 to 10m of UST will be sucked into their treasury and never sold.
  1. Bond $1m UST with Olympus and 3,3 the OHM forever
  2. $255k in Luna incentives over 3 months for the gOHM-UST pair on Terra. Olympus will be incentivizing this pair with 0.4 gOHM per day, at current price of ~$18,500 that’s roughly $666k over 3 months. Additionally, there will be ASTRO rewards on this pool too.
  3. $85k in Luna incentives over 3 months for the gOHM-UST pair on Solana, this will be the only incentivized gOHM-stable pair on Solana. Olympus will be incentivizing this pair with 0.08 gOHM per day, roughly $133k over 3 months.
  4. $85k in Luna incentives over 3 months for the gOHM-UST pair on Polygon, this will be the only incentivized gOHM-stable pair on Polygon. Olympus will be incentivizing this pair with 0.08 gOHM per day, roughly $133k over 3 months.

Total funds: 1.425m UST

Transparency plan: Follow up posts in the Agora thread including when UST bonds are live, 1m bond transaction, bi-weekly updates on UST in the OlympusDAO treasury for two months, all three pair addresses when they exist and where you can join the farm.

Rari Fuse (Ethereum)

Rari Fuse is a platform that allows permissionless creation of lending and borrowing pools with any collateral assets, to date it has over $1.2B in assets lended.

The largest pool currently is Fuse Pool 6, Tetranode’s Locker, with over $535M supplied and $135M borrowed. Floating interest rates for lending and borrowing are based on demand, currently in Pool 6 FEI, DAI, MIM, USDC, and FRAX all have a lending APY of roughly 20% due to the insane borrow demand from users wanting to borrow against their gOHM. As an example there’s $46.3m DAI lent and $33.2m borrowed in this pool, $88m USDC lent and $58m borrowed, $31m FRAX lent and $24m borrowed.

UST could benefit from being introduced into a couple of the most popular pools on Fuse for a few reasons. First, it creates an additional use case and new source of liquidity for UST on Ethereum, allowing people to borrow UST against any of their assets including gOHM, stETH, and LDO to then use within DeFi. Secondly, it creates an alternate way for UST depositors to earn interest on lending. UST can quickly gain utilization within these pools if a large amount is supplied and it becomes the cheapest stable to borrow - currently the cheapest is DAI at 31% APY. Borrow demand leads to lending demand, leading to more deposits which cycles to create a cyclic blackhole for UST.

The Terra community pool should lend up to $20m in UST between Fuse pools 6, 18, and 7, beginning with $5m in pool 6, $2.5m in 18 and 7, and $2.5m top ups into these pools as needed based on utilization. The top ups instead can be used to fund additional pools, help discuss in the forum here on what strategy you’d like to see. After this initial seeding organic demand should exist to suck more UST into Fuse. This position will be revisited in six months, or earlier if the community requests, to keep or withdraw the funds and yield generated.

In the future, new Fuse pools and assets can be considered, one can imagine the value of aUST as a collateral option or even an entire Terra based asset pool.

Total funds: 20m UST to seed pools for six months, after which funds can be left or returned to the community pool.

Transparency plan: Follow up posts in the Agora thread when funds are deposited into pools, along with monthly updates on UST utilization ratios and yields generated.

InvictusDAO (Solana)

Sol Invictus is the decentralized reserve currency built on Solana that aims to be more than just an Olympus fork. Invictus has done a great job putting their treasury to work, they have a market cap of $120m and treasury of $70m.

To date the Invictus treasury owns nearly $50m in USDC/USDT. Invictus, with support from Terra and Frax, plans to introduce UST, UST-IN LP, and FRAX bonds to slowly replace and overtake the USDC/USDT in their treasury. This creates another black hole for UST from which it will never be sold. To show support this proposal asks the Terra community pool to bond $250k in UST, and Frax Finance will be doing the same.

Total funds: 250k UST

Transparency plan: Follow up posts in the Agora thread when bond transaction is done and bi-weekly updates on UST in the Invictus treasury for two months.

plz pay special attention to pretty owls below:

Convex (Ethereum)

Votium incentives have been going extremely well and continue to be net positive due to the arbitrage that exists from $emissions > $incentives. The 250m deposited from the community pool, along with $2m in incentives, have farmed nearly $4m in CVX which is used to direct additional rewards to the UST-3CRV pool.

To date over 80% of all CVX has been emitted and the #CRV owned by a single CVX continues to grow. In the last Votium round Frax provided 7.5m in FXS incentives for FRAX-3CRV and Abracadabra did 3.1m in SPELL incentives for MIM-3CRV. The Terra community should capitalize on the effectiveness of bribes right now and take this chance to farm as much CVX as we can - this is an important long term strategy as the CVX earned now can forever be used to direct rewards to the UST-3CRV pool.

The Terra community pool should enact a few changes to its 6 month curve war strategy:

  1. Add $1m in additional Luna incentives on UST-3CRV, considering that the Terra community owns 60% of the pool (250m/430m), the Terra community funds will earn more than that back in CVX/CRV and continue to grow our liquidity at the same time.
  2. Move current MIM-UST incentives to the UST-3CRV pool. The Degenbox, while great for consumers has put Anchor’s yield reserve in a tricky situation, while Anchor figures out long term sustainability there is no need to additionally incentivize the MIM-UST pool which already has 970m in liquidity.
  3. Increase FRAX-UST incentives by $0.5m, with matching FXS from Frax. This pool helps grow UST MC and create liquidity with an important stable on Ethereum while paying half the incentives. Net positive. Frax is the largest protocol owner of CVX and the founder Sam commented on the last proposal:

“Decentralized stablecoin pegs are stronger together than competing zero sum games where one has to lose… We’re happy to channel this CVX power to the new UST-FRAX Curve pool together so it benefits both of our projects rather than subsidizing USDT, USDC, and DAI which get free passes on Curve’s 3CRV metapools.”

  1. Enact a CurveDAO vote to ramp the Amplification parameter on the UST-3CRV pool to 500. The higher the A the more the pool treats each side as 1:1 even when imbalanced, an A of 0 has the pool behave like a standard xyk Uniswap pool. For context these are current A values: UST-3CRV = 100, MIM-3CRV = 2000, FRAX-3CRV = 500, MIM-UST = 1000.

Of course as the markets change over the next few months the Terra community will continue to revisit its Convex/Curve strategy to increase or decrease incentives when necessary.

Total funds: 18m UST, 6 months * 2 gauge votes per month * 1.5m = 18m

Transparency plan: Continued bi-weekly updates in the original Convex Incentive Agora like this.

Tokemak (Ethereum)

Tokemak recently expanded the set of base Pair Reactors from just ETH ($309m in deposits) and USDC ($214m in deposits) to include UST, FRAX, FEI, LUSD, and DAI. This means users who deposit UST into the Pair Reactor earn TOKE rewards and TOKE voters on this Pair Reactor balance and determine the depth of reserve of those Pair Reactor assets, in addition to acting as Reactor collateralization. Liquidity Directors who vote for Pair Reactors on Tokemak direct liquidity throughout DeFi by combining assets in Pair Reactors with those in Token Reactors. To learn more about Tokemak check out this video by The Defiant.

Tokemak creates sustainable liquidity for DeFi protocols by helping to deploy liquidity into capital efficient markets through DeFi against multiple assets. This removes the need to provide direct liquidity incentives to specific pairs since TOKE is emitted to depositors. Tokemak specializes in getting widespread liquidity which complements liquidity depth found in Curve.

The Terra Community Pool should deposit $50m UST (or more if the community suggests so in the comments) for six months into the UST Pair Reactor, following the smart footsteps of FRAX who will be depositing $100m. These funds can be withdrawn at any time if the community wishes or the deposit can be extended as we revisit the position. The deposit will be earning TOKE which the Terra Community can use in the future to help vote in a LUNA Token Reactor during the next C.o.R.E. vote - adding a TOKE farm for LUNA holders on Ethereum - along with directing TOKE rewards to UST deposits. Further the TOKE earned can definitely be utilized to command a depth of deposits for UST’s Pair Reactor (i.e. the more TOKE staked to the UST Pair Reactor, the higher the APR on the UST side of the Pair Reactor, thus incentivizing more people to deposit UST and bolstering the depth of UST’s presence in the system). Finally, having a reserve of TOKE allows the Terra Community to utilize the TOKE as an LD on the Token Reactors to help strengthen or create new pairs for whatever asset - aka the TOKE can be used to vote for there to be an ALCX/UST pair as an example.

Total funds: 50m UST for 6 months, after which funds can be left or returned to the community pool.

Transparency plan: Follow up posts in Agora when the deposit is made along with monthly updates on liquidity direction and TOKE farmed.

EDIT 1: The community has suggested raising UST deposited in Tokemak to $100m

fin

As always, UST withdrawn from the community pool will swap to Luna before each gauge vote using Terraswap / Astroport as to not dilute Luna supply.

All funds withdrawn from the Community Pool will be kept in the following Terra multisig wallet: terra1jrhxdtwxrsxw3t2al6t3sga89974juhpccuxct
The multisig wallet on Ethereum is: 0x9538D438d506Fc426dB37fb83daC2a0752A02757

Both multisigs will be controlled by 5 members with 4/5 quorum required: @JeremyDelphi, a member of the TFL Finance team, myself, @Papi, and @lejimmy

If you’re interested in the individual wallet addresses that control the multisig you can find them by looking at the multisig’s address on Terra Finder.

Transparency plans for each proposal have been listed to keep the community aware of fund allocation.

tldr

  • OlympusDAO: Enable UST Bonds, bond $1m UST, 425k UST swapped to LUNA via Astroport over 3 months for gOHM-UST incentives on Terra, Solana, Polygon
  • Rari Fuse: 20m UST to seed fuse pools for 6 months to kickstart UST borrowing
  • InvictusDAO: Enable UST Bonds, bond $250k UST
  • Convex: $18m UST swapped to LUNA via Astroport over 6 months for increased Votium incentives
  • Tokemak: $50m UST deposited for 6 months to get widespread liquidity and farm TOKE

Total funds: 89.675m UST
Total funds after EDIT 1 (as requested by the community): 139.675m UST

24 Likes

Great ideas. Let’s do it.

1 Like

I like the ideas ezaan. Curve wars are really hot right now and the Lunatics should play a more active role…farming more CVX should help our pools greatly in the future!

On Tokemak we should match FRAX with $100m UST if you ask me…are the Lunatics with me on this???

7 Likes

Echoing here Celestia. After having a stable product an accelerated export of Terra stables in all ecosystems with meaningful volume is a great idea. Thanks eezan for putting all the info together and driving the project

6 Likes

It’s great to see ideas on how to expand the UST to other L1’s and how they performed so far.

So far not seeing any drawbacks with the proposal and being already behind Frax at Convex, we should at least equal 100M or put a little more in Tokemak to balance the forces.

2 Likes

@ezaan interesting, interesting.

It is great to see TFL playing to the recent trends within the Web3 ecosystem - such as Curve Wars and OlympusDAO forks.

With the brevity of previous trends in crypto and the speed of innovation in the industry, do you worry that interest in these protocols will be short-lived?

Another question, related to the statement below:

Do you have plans for voting with CVX/CRV earned from rewards? It may work as a great opportunity to help influence the Curve and Convex ecosystem while increasing the yield in these pools.

This is a massive proposal sure to garner attention from Degens across networks. We are excited to see new use cases enabled by progressive, and frequent proposals.

2 Likes

gm gm ser thanks for the reply @fig

Interest may be short but as long as the Terra community stays agile enough we should be able to adapt well - the community pool can always withdraw funds early. Additionally, even though regular OHM forks have lost their spark OlympusDAO and InvictusDAO continue to innovate and will surely suck in millions of UST into their treasury where it will sit forever. Finding usecases like this are always beneficial since a small spend by the community pool leads to 10x the amount of UST being thrown into a blackhole.

no doubt we consistently vote lock our CVX every 2 weeks ahead of each gauge vote and use them to vote for the UST-3CRV pool. This is great because it allows us to claim our own Votium incentives and recycle them for the next round! In the long term once we have garnered enough CVX power we’ll be able to cease LUNA incentives altogether.

<3

4 Likes

“As always, UST withdrawn from the community pool will swap to Luna before each gauge vote using Terraswap / Astroport as to not dilute Luna supply.”
Are there rammifications for flooding Luna supply briefly? (Flash liquidations in Anchor maybe?) Should UST withdrawn and swapped for this be spread out over time (less shock perhaps) or done all at once? Question occurs is all, I don’t have an answer.
Otherwise, I dig it, even if can be (should be?) separate governance proposals for each pool and/or project. Still, I’ll vote for this as a whole. Neat.

Ya, support matching FRAX’s amount here.

1 Like

I may have to go over docs. UST in community pool is somehow not minted UST? Moving it affects Luna supply so should be converted to Luna and back? I thought if UST is minted, and exists, it had already affected Luna as it is in order to exist as UST in the first place, and can freely move or not move without affecting Luna unless burned?

Hey @FaeLightCarmenum the UST withdraw from the community pool already exists there from this prop: Burn Pre-Col5 Community Pool, thus we will not be flooding the Luna supply at all.

From this prop the $425k UST will be used to buy Luna on Astroport (buy pressure on an AMM which means NO Luna supply increase) for gOHM incentives. Further the $18m UST that is to be swapped to Luna (also on Astroport) for Convex incentives will occur in $1.5m batches every 2 weeks over 6 months before each Curve gauge vote. The rest of the funds requested will remain in UST.

1 Like

Cool, thanks for the info / clarification.

1 Like

Hey @ezaan just wanted to say thank you for putting this proposal together, I think its a very sound approach.

One thing I would change here to make the proposal a lot more efficient is to shift all the incentives in curve wars into UST-3CRV.

One more thing, I would also go more aggressive with and bring bribes close to $7m per epoch, emulating Frax’s strategy. For every $1 paid in bribes, LPs are getting $2.7 worth of emissions according to Llama Airforce. The Terra community pool owns $250m out of $387m of the liquidity in the UST-Wormhole pool. Back of the napkin math, it makes sense to max out bribes as long as the $ of emissions / $1 bribed is more than $1.7. This will significantly accelerate our objective in terms of accumulating CVX and strengthening our foothold in the Curve and Convex wars.

As a cherry on top, now that we have 660,000 vlCVX worth of voting power (source: DAO CVX Leaderboard), this would make our bribes EVEN more capital efficient as a lot of the LUNA bribes that go out to vlCVX voters will come back to us (as we’ll be voting for UST-WORMHOLE). Haven’t done a deep calculation here but this means we can keep recycling the bribes for next rounds. Also worth noting that this capital efficiency will also get better and better as we farm and lock more CVX.

Otherwise - this is a fantastic proposal, curious to know what the community thinks.

5 Likes

Fantastic idea!

today’s gOHM (~$8k) doesn’t look as great as 11d ago (~$18.5k)

@JeremyDelphi @ezaan thanks for leading the curve wars on ETH!

  1. No doubt we should keep recycling the $LUNA bribes that is coming back to us.
  2. I also think we should keep accumulating the $CVX we earned through the UST-WORMHOLE LP.
  3. As for cvxCRV, what are we doing with that? Should we swap them for more CVX or are we staking it on Convex? Or are we suggesting to sell them for $UST and add them into UST-WORMHOLE LP?

We should also push Wormhole to release their audit report, and get the Frax-UST gauge up for vote again.

I fucking love these proposals @ezaan and the transparency expectations are new and welcome. Thank you for all the time you put into writing these, and to the whole team!

1 Like

What about Fantom? FRAX is already doing bribes there. They are incentivizing FTM/FRAX liquidity by bribing Liquid Driver (LQDR). FRAX is also accumulating LQDR similar to how they were early to CVX.

1 Like

maybe the first step is getting the FTM-UST Pool on Spooky and Spirit going first and then moved into LQDR with a stablecoin pair with MIM/FRAX? @ezaan what’s our strategy/your thoughts on Solana, Fantom and Avalanche, will we see similar close the loop strategy where we own big portion of the UST LP and we keep recycling the rewards?

Liquidity Mining Proposal #3: Incentives for UST Adoption on Avalanche, Fantom, and Moonbeam

Hey -

I’ve been talking directly with the SpiritSwap, SpookySwap, Beethoven x, and Liquid Driver teams. We’ll be working with the DEXes to set up and incentivize FTM-UST pools once the Axelar bridge comes goes live (sometime this week)

1 Like