Title: ANGLE-EUL DAO to DAO Swap
Author(s): Pablo Veyrat (Angle Protocol core team member)
Related Discussions: Allocation of DAO treasury to agEUR
Submission Date: 27th of July 2022
This is a request for comments for a $100k ANGLE-EUL DAO to DAO swap.
If you’ve already read this proposal, you can switch this section.
Angle is a decentralized stablecoin protocol, responsible for the issuance of agEUR, the biggest decentralized Euro stablecoin.
agEUR is one of the main assets on Euler with 6.45m supplied and 1.7m borrowed on the platform.
It is based on an over-collateralized protocol (current collateral ratio = 220%). agEUR can be issued from different means and across different modules:
there is a core module which allows to mint agEUR from USD stablecoins at a 1:1 rate: the protocol hedges itself against the EURUSD change risk by issuing perpetual futures and it relies on other depositors (called standard liquidity providers) in addition.
agEUR can also be borrowed against other assets (like wETH, wstETH, wBTC) in a way that is similar to what Maker is doing with DAI. Liquidations were inspired by Euler’s cutting-edge liquidation mechanism
The protocol can natively mint agEUR in different places and protocols if the ways these agEUR enter the market are guaranteed to be over-collateralized. To this extent, 3.6m agEUR were minted on Euler and there’s been a governance vote that guarantees that borrow interest rate will remain < 3%.
agEUR has consistently held its peg since its launch, TVL of the protocol is $83m and the protocol has accumulated a safety net of around $10m since its launch.
agEUR is so far the most traded Euro stablecoin on-chain and it has full range liquidity controlled by the Core team on Uniswap on its UniV3 ETH-agEUR pool.
Protocol is obviously audited and got several independent reviews from independent contributors like this one.
About Angle and Euler
As mentioned above, Angle has the opportunity to mint agEUR on Euler, and has so far minted 3.6m agEUR on the platform. The lending yield goes to the protocol which should distribute it as some point to veANGLE holders.
Angle indeed has a ve-tokenomics and distributes a portion of the revenue it is making to veANGLE holders, that is to say ANGLE token holders that have locked their tokens for a length ranging between 1 week to 4 years. veANGLE tokens are currently paying a 30% yield to holders.
We’re currently working on a contract similar to what Maker is doing on Aave with the D3M that should enable us to automatically mint as soon as the borrowing yield is getting too high.
Overall strategy on the Angle side is to make Euler a central place for agEUR lending and borrowing, and to take advantage of Euler’s key features to facilitate FOREX trading in DeFi (this is the sense of the proposal we have already posted).
Relations between Angle and Euler can be really synergistic in that sense.
To facilitate the synergistic relations between Angle and Euler, we’re proposing here a $100k DAO to DAO swap between Angle and Euler DAOs.
Idea is that Angle will be able to stake the EUL tokens to vote for the agEUR gauge and encourage people to borrow agEUR on EUler. While the Euler DAO would be making revenue on the borrows (reserve factor), with the obtained ANGLE tokens it’d be possible to earn an additional revenue when algorithmic market operations revenues from Angle are distributed to veANGLE holders.
Euler DAO could be whitelisted to own veANGLE tokens.
This would also allow Euler to vote for the gauges of their choice (like G-UNI agEUR-ETH) to direct ANGLE emissions in places that could reinforce the agEUR oracle used for Euler.
Last, this would also enable the EUL governance to diversify its treasury and gain overall voting power in other DAOs.
Specification and Implementation
For the TWAP, we could use a 7-day VWAP data from Nomics for the ANGLE and the EUL token.