For
Scope:
Request DAO approval to deploy funds on Curve Finance into the bLUSD-LUSD3CRV Pool.
Current Governance Limitations:
WIP #28:
[…] the Risk Officer will now identify and share with the Treasury Council the risks associated with each strategy prior to the council’s vote […]
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:
- Deposit up to $6mm into the bLUSD-LUSD3CRV Pool on Curve using the proceeds from the chicken bonds as they claim and mature.
Rationale:
The Wonderland Treasury still has a lot of unallocated funds and given the current market conditions there are limited opportunities. This is a fairly straightforward stable farm strategy with relatively low risk as WL will only have exposure to stablecoins and bLUSD. In the absence of a Risk Officer, the DAO is being asked to accept the risk by providing its approval.
Plan/Strategy:
The Treasury Operators (TO) recommend depositing up to $6mm into the bLUSD-LUSD3CRV Pool on Curve using the proceeds from chicken bonds as they are claimed and mature.
Example Yield Scenario:
Curve is currently paying a base vAPY of 2.36% and a rewards tAPR of 46.96% (LUSD) for this pool. Currently the pool size is $11.4mm for bLUSD-LUSD3CRV. Assuming a more conservative annual yield of 25% with pool dilution, the treasury would receive a daily yield of $4,109.
Realized yield may fluctuate based on a wide variety of factors including changes in the curve reward rates. The Treasury Operators will monitor the positions to maximize profitability and manage risk.
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.
Snapshot:
https://wl-l.ink/Snapshot/TMP-13
Voting options:
- Approve Deployment
- Deny Deployment
Risks/Concerns
Impermanent Loss
If pooled stables depeg it can cause an imbalance, leading to IL. Tokens that we will be exposed to in this pool are: bLUSD, LUSD, DAI, USDC, and USDT. The Treasury Team agrees that these stables and bLUSD are relatively low risk. LUSD is overcollateralized and has no centralization risks.
Smart Contract Risk
Smart contract, execution and exploit risk are present as usual.
Curve has been audited several times: