Hello! I’m Solarcurve and I’m part of a group called the Balancer Maxis who currently lead partnership integrations for the Balancer Protocol. I believe Euler is a prime candidate to take advantage of Balancer’s boosted pool technology. A boosted pool means most of a liquidity pool’s assets are sent off to earn extra yield for liquidity providers - in this case, deposited to Euler.
Our flagship Aave boosted stable pool has been live for nearly a year and has ~$120M TVL. It only has a boosted yield of 0.95% because the deposit rates on Aave are fairly low. Euler has significantly higher deposit rates which will help attract even more TVL. As TVL increases in a boosted pool the boosted yield goes UP because a higher percentage of the pool’s assets will be deposited to Euler. Only a certain amount of tokens need to remain available for trading, perhaps 500k - 1.5M.
Motivation
The Euler community has recently begun to consider incentivizing the lending side to increase TVL and further decentralize the distribution of EUL. I’d like to suggest using EUL to incentivize voters (“bribe”) to direct BAL & AURA emissions towards a Euler boosted pool instead. Why is this better than simply having lenders earn EUL directly?
The ROI for voter incentives is consistently around 2:1 in the last couple of months. You get $2 of BAL & AURA emissions for every $1 of EUL spent
Balancer will return earned protocol fees as additional voting incentives. This means even after you stop spending EUL your pool(s) will continue to see emissions directed towards them.
Balancer applies our 50% protocol fee to swaps and yield. With Euler’s high deposit APR’s your pool would likely generate significantly more protocol fees than our Aave boosted stable pool. These earned protocol fees being returned as additional voting incentives into the 2:1 ROI mentioned above will help create a strong tailwind to growing the pool’s TVL.
Specification
In terms of what’s required to make this a reality, Balancer is finishing development of generalized boosted pool support on our UI later this month. We also need to create the underlying boosted pool infrastructure to support Euler which is fairly simple to do and can be completed in less than a week. Note that if we need to account for staking the deposited Euler assets into another staking contract to earn EUL this could increase development time & effort significantly.
Beyond that, some amount of EUL should be allocated weekly to bribe on Aura’s Hidden Hand market (better efficiency than Balancer’s). For comparison’s sake Rocket Pool has been allocating ~3.2k RPL every two weeks which is ~$68k in the most recent round. Balancer added an additional ~$30k on top from earned protocol fees. The rETH/weth pool has a total yield on Aura of ~9% APR with $63M TVL. The Aave boosted stable pool as an APR of ~4.1% on Aura. It’s likely a Euler boosted stable pool would land in a similar APR range.
Summary
I propose the creation of a Euler boosted USDC/DAI/USDT pool that is allocated 15,000 EUL as voting incentives every two weeks (open to feedback about a lower number!). This would run for a trial period of three months, after which the results can be evaluated by the Euler community and an extension can be considered. Tentative start date would be early December.
It may also be worth considering alternative pools like Euler boosted weth/wstETH or Euler boosted weth/(Euler boosted USD LP) if the community desires to incentivize the WETH lending market.
We support this proposal. Integrating eTokens in a Balancer boosted pool represents a great opportunity for Euler. As a comparison, the Aave boosted pool attracted $120M in TVL. This is also a great opportunity for Euler to indirectly benefit from Balancer and Aura gauge wars.
15,000 EUL every two weeks might be a bit on the aggressive side but we would definitely support some incentivization for the initial trial period.
what would be the direct benefit of having the boosted pool to the protocol? I don’t think euler would provide the liquidity by themselves. so it’s essentially paying balancer using EUL to give out token to liquidity provider which also include euler lender. so the calculation needs to be cost of eul per tvl raised.
im not super sure if this is the fight euler wants to be since we see also a lot of lending platform overpaying for liquidity. Also, potentially will be conflicted with eulerswap in the future.
Hey! It looks like a good marketing and liquidity opportunity. However, I would opt for keeping incentives within Euler for now. Besides, I share concerns of @patria that providing significant incentives to the third party for the moment would contradict to the long term vision of Euler, especially regarding the future launch of EulerSwap .
It’s a great point that the key is TVL per $ of EUL spent. For the reasons I laid out in the proposal, namely the 2:1 multiplier on voting incentives and that Balancer will add additional incentives from the protocol fees we’ll earn on the pool, there is no question Euler will see a better return with Balancer compared to simply printing EUL on lenders. Not to mention that even after you stop spending EUL incentives this pool would continue to receive BAL & AURA emissions as Balancer would continue returning fees as voting incentives forever.
There are other benefits like enabling the trading of “e” assets and opening up new integration opportunities while not complicating other integrators using Euler by forcing lenders to stake in a contract to earn EUL. I also think building EulerSwap on Balancer is a strong opportunity worth exploring but that’s a bit outside the scope of this proposal
If a lower amount would make this more appealing that’s an option. I stole the 15k number from the other proposal up for a vote now.
This seems like a good and novel use of eTokens to grow TVL. You can’t argue with a 2:1 ROI! I am excited to see further collaboration between the two protocols and look forward to seeing this be discussed further.
I’m generally in favor of a trial with a lower emissions schedule. That said, I’d like to first understand Balancer’s exposure to current market events, given the following firms are stated investors in Balancer:
Thanks for the question. I’ll take this opportunity to suggest starting with 5,000 EUL every two weeks rather than 15,000 EUL. I believe this should be sufficient to clearly show that working with Balancer will result in more TVL per $ of EUL than printing EUL on lenders directly. In three months the community can assess the performance of the trial and adjustments can be made if there is a desire to continue.
As far as contagion risk from the collapse of FTX, Balancer’s treasury is held transparently on chain here and secured by a 6 of 11 multisig you can read about here. We never transacted on FTX or held assets there, or with any of the associated entities.
As you mention, some of these entities have participated in previous funding round(s) for Balancer Labs and may have ongoing BAL vesting schedules. I’m not privy to the details and I believe the details were never made public. There is over $160M of BAL/WETH liquidity, of which 90% is locked for nearly a year, so even if BAL is market sold from bankruptcy proceedings it will have a negligible impact on BAL price and zero impact on Balancer’s operations.
Happy to elaborate further if that would be helpful.
i voted against this. liquidity mining has been shown time and time again to be a short term game that clouds insights into the performance of a protocol and pushes a project further into confounding nonsense.
“i dont understand it” and then, shortly following, “free money” are the predominant reactions to these kinds of things. There is no free lunch. fund things that create value, please!
I certainly agree liquidity mining is a less than ideal short term mechanism. The only reason I brought forward this proposal was because I saw Euler community moving towards direct liquidity mining on depositors, which is functionally the same mechanism as what I’m proposing here. The difference is there are strong reasons to believe this proposal will generate more TVL per $ of EUL spent than the already approved eIP 24 to print EUL to USDC, USDT, and weth depositors.
If this proves more efficient that could be discontinued and redirected here. The choice here is not really to do liquidity mining or not, since Euler has already voted to do that. It’s whether you think working with Balancer would lead to a more efficient liquidity mining campaign, which I’d be happy to discuss further if you have doubts.
I think this is definitely something that could boost TVL, but in the short term, I think it’s worthwhile seeing the effects of eip 24 before making any decisions.
