Disclaimer – I am a member of the TFL team and this is not an april fools joke kek
As hinted in Reasonable Strats Part Five here are some measures the Terra Community should take to increase UST presence across Ethereum and other EVM chains via a collaborative, mutually beneficial, and efficient partnership with Frax Finance and Redacted Cartel.
Introducing the 4pool, the new gold standard for stablecoin liquidity, bridging the gap between decentralized and centralized stables. The 4pool is a new curve pool composed of UST, FRAX, USDC, and USDT. Together Terra and Frax will concentrate stablecoin liquidity across 4pools on every major chain via Curve. Initially, 4pool will be tested on Fantom, Arbitrum, and mainnet Ethereum (once a Curve fix is deployed to allow this pool to be made on Eth).
Currently, UST and FRAX directly compete against each other for CVX/CRV emissions through votium incentives and vlCVX votes while each of us subsidizes 3CRV, this war is unlikely to end given both of us have enough firepower. Instead, together, we can focus on growing the entire decentralized stablecoin pie and help create sufficient liquidity to allow the entire DeFi industry to transition to greater usage of decentralized stablecoins. Ultimately, DeFi cannot follow through with its cardinal rule of decentralization while using stablecoins that can be censored by any one entity.
Frax and Terra are the two largest protocol holders of CVX (over 3.65m CVX cumulatively) and the two largest votium incentivisoooors (7m in FXS and 4m in UST) thus together they can direct vlCVX power and votium incentives to make 4pool the most liquid and utilized stablepool across chains. Together they effectively get more liquidity per dollar spent.
The 4pool ethos is the realization that “stablecoin pegs are stronger together than competing against each other.” That’s why Terra and Frax have decided to support this new DeFi primitive on all chains through Curve Finance’s deep stableswap technology. Additionally, given the depth of resources both projects will pour into making 4pool successful, we expect 4pool staking to be a new gold standard of stablecoin yield in all chains that 4pool is found - aside from Anchor of course ;).
Additionally, given how the FRAX AMO structure works, the 4pool enables UST to become a collateral asset for FRAX further aligning interests between the projects since as FRAX grows UST grows too and vice versa.
Redacted Cartel is an initiative using the POL mechanics of OlympusDAO to accumulate as much liquidity as possible from the Curve ecosystem in order to have a majority say over the Curve gauge along with other protocol governance systems. The cartel does not aim to act maliciously, rather gamify and decentralize the process of incentivizing the gauge through a DAO. Using concepts from the Olympus model, they have made a blackhole for CRV, CVX, FXS, TOKE, and gOHM.
Redacted has a treasury valued at over $100m in protocol governance tokens, you can see more details about their holdings and revenues here. Additionally, with the acquisition of Votemak, Redacted (V2) has created Hidden Hand, a generalized incentive market protocol for veTokens.
An initial Terra x Redacted partnership has been made on many fronts:
Firstly, as passed in Degen Strats Part One, the Terra Community Pool will be using Hidden Hand to secure a Tokemak Reactor in the upcoming C.o.R.E. vote. Something something Hidden Hand something something veASTRO, veANC, Rust code.
Secondly, as passed in Reasonable Strats Part Five, the first DebtDAO loan using UST will be provided to Redacted Cartel. Keep an eye out on comms from DebtDAO as to the structure of that partnership.
Lastly, and most exciting, the Terra Community pool will partner with Redacted for their vlCVX power in Convex Gauge votes given Redacted is the 3rd largest DAO holder of CVX. Redacted will vote for the UST-3CRV pool with their CVX (eventually the 4pool when launched on mainnet), claim the UST votium incentives as per usual, and be supplied with a few percent extra. Redacted will never sell the UST for another stablecoin and will use it to pay contributors, participate in seed deals, single side LP, and build up their stable treasury. This is beneficial for both parties on multiple fronts. Redacted is able to optimize their vlCVX since when delegated to Votium they receive multiple types of tokens that are not directly aligned with their mission. Whereas now they receive solely the people’s stablecoin which can be used in many ways throughout DeFi to further their goals. The Terra Community on the other hand spends approximately the same amount on vlCVX incentives and ensures the UST incentives are used meaningfully within DeFi rather than sold, bridged, or simply placed into Anchor.
These steps further increases UST presence within Ethereum DeFi and marks a glorious partnership with one of the most exciting projects within DeFi.