Scope:
Request DAO approval to deploy funds on Curve Finance.
Current Governance Limitations:
As per WIP #27:
While the proposed investment can be voted by the Treasury Council, the above guidelines cannot be followed as expected due to the current lack of Risk Officer, a TMP is being used to assist treasury personnel with decision making by having the DAO review the proposal, assess the risks and make the final decision.
Objective:
- Deploy $4mm DAI into the BUSD-3CRV pool on Curve.
Rationale:
The Wonderland Treasury still has a lot of unallocated stables and given the current market conditions there are limited directional opportunities. Curve is one of the safest DeFi protocols out there and this will provide returns while waiting for market conditions to improve.
Returns are expected to be 14-15% annually. This takes into account our added funds.
This will generate from $560,000 to $600,000 annually or $1,534.25 to $1,643.84 daily*.
Position will be pulled if yields drop below 8% annually for longer than one week.
*These returns are only estimates and will vary. Treasury Operators will monitor profitability and manage the position. Yields change frequently in DeFi.
This is a straightforward stable farm brought forth by a community member through the community proposal system. In the absence of a Risk Officer, the DAO is being asked to accept the risk by providing its approval.
Snapshot:
TBD
Voting options:
- Approve Deployment
- Deny Deployment
Curve Finance Background:
Curve is the long-standing premier stableswap DEX designed for efficient swaps. The vast majority of aggregated swaps on Ethereum route through Curve due to their deep liquidity. They have a TVL of $3.73bn with $3.43bn of that on Ethereum.
Risks/Considerations:
Recent Binance FUD:
Binance appears healthy with the vast majority of funds in stables. Net outflow of funds has significantly slowed in the last 24 hours since this proposal was created. See Binance’s health here (assets vs. clean assets): https://defillama.com/cexs
Due to the nature of TMPs having a time delay, we will be proactive in managing funds based on changes in the next few days. The multisig will not execute deployment if there are unexpected risks.
Impermanent Loss:
If pooled stables depeg it can cause an imbalance, leading to IL. Stables we will be exposed to in this pool are: USDC, USDT, DAI, BUSD. We have exposure to all of these with the exception of BUSD (Binance’s stable coin). The Treasury Team agrees BUSD is at a very low risk of depegging.
Smart Contract Risk:
Smart contract, execution and exploit risk are present as usual.
Curve has been audited several times: