Summary
Send 5% of the total current revenue to incentivize the eUSD/USDC pool on Curve (Ethereum). This proposal aims to target the current eUSD Revenue and will NOT interfere with the adjacent eUSD Rev Share proposal.
Curve Pool: Curve.fi
Address: 0x08bfa22bb3e024cdfeb3eca53c0cb93bf59c4147
Guage: 0x87f791090b09069b3f9c64e3be3cbbc0b45fc9b6
Abstract
eUSD, the Electronic Dollar, is a censorship resistant and decentralized stablecoin deployed on the Reserve Protocol. Currently ABC Labs is incentivizing several RToken pools with the goal of building a sustainable and liquid ecosystem.
Problem Statement
For the past year the growth of eUSD has stalled. According to the register app in July of 2023 the market cap of eUSD was $21.7m.
Today, as of publishing this proposal in July of 2024, the market cap is $22.4m.
Additionally, eUSD liquidity is too low for large transactions through the eUSD ↔ USDC Curve pool. This poses a risk to the growth potential of eUSD. Low liquidity is hampering large, natural movements in and out of eUSD. There is currently only $2 million of TVL in this pool.
Additional context:
Governors Guild - Splitting eUSD Yield to Incentivize Liquidity - 2024 April 18
Rationale
The overcollateralization for eUSD is currently sitting at 66%, this level of protection is quite extreme. While overcollateralization is important, eUSD governance is funding something that is overfunded. In short, overcollateralization does not need to be this high in order for eUSD to maintain its self-healing abilities. By sending 5% of the Revenue to help incentivize the eUSD/USDC pool on Curve(Ethereum), this could potentially help grow the eUSD market cap and governors will be more aligned with ABC Labs with the goal of building a sustainable and liquid ecosystem.
Risks
The risk here is lowering the overcollateralization, however eUSD can afford to do this.
The other risk is that it could potentially lower the yield on eusdRSR. If sending some of the revenue to the Curve pool can potentially grow the market cap, then the concerns of lower yield will be mitigated, a greater market cap can potentially create a higher yield.
Lastly, will this work? Will more revenue be needed in this experiment, or is less revenue sufficient to accomplish the goal of growing the eUSD market cap? The beauty of programmable money is that a proposal like this can always be undone if it doesn’t work.
Governors should evaluate the effectiveness of this proposal for a 3 month period. At the end of 3 months, governors can decide to either continue this effort, increase the revenue sent to the eUSD/USDC pool, or return the revenue to the stakers.
- Yes, I am in support of this proposal.
- No, I am not in support of this proposal.