Add XAI/FRAXBP Factory Pool to the Gauge Controller

Gauge Proposals
#1

Summary:
Proposal to add XAI/FRAXBP Factory Pool to the Gauge Controller to enable users to assign gauge weight and mint CRV.

Silo has recently launched its stablecoin, XAI /ZI/, an ERC20, over-collateralized stablecoin with a soft peg to the US Dollar. XAI can be minted in the form of credit lines by the SiloDAO only. The DAO will be taking substantial measures to seed and grow XAI’s on-chain liquidity through its CVX, USDC, and ETH holdings.

References/Useful links:

Protocol Description:

Launched in September 2022, Silo Finance is a non-custodial, decentralized lending protocol that creates risk-isolating money markets. In our lending protocol, each market (‘silo’) consists of a base asset, such as $CRV, and two bridge assets, ETH, and a stablecoin, XAI. Borrowers in each silo (market) are only exposed to the risk of 3 assets at any time rather than all token assets in the protocol. This novel design allows the protocol to create a lend/borrow market for every token asset without creating protocol-wide risk as seen in traditional lending markets.

Issued and solely managed by the SiloDAO, XAI is an ERC20 token that serves as protocol-wide collateral across all markets. Via executive proposals, the SiloDAO can choose to mint XAI and deposit it into any number of silos. Similarly, the DAO can burn XAI that is extended to any silos via governance proposals. When the DAO mints XAI into a silo, it effectively determines XAI’s backing. Similarly, when the DAO burns XAI in a silo, it changes XAI’s backing.

The SiloDAO has so far minted a total of 15M XAI into two silos: XAI-ETH and USDC. Soon, users will be able to overcollateralize ETH, or USDC, and borrow XAI into existence, establishing XAI’s backing with ETH USDC.

The SiloDAO will use up to $3M of its holdings to seed initial liquidity in the XAI/FRAXBP pool. The DAO also plans to use its holdings of vlCVX to incentivize the pool.

Motivation:
XAI/FRAXBP pool is of utmost importance to the Silo Protocol as it helps maintain XAI’s soft peg and ensures smooth liquidation of undercollateralized loans.
Curve is the cornerstone of DeFi, and with XAI/FRAXBP gauge, Silo hopes to benefit from the Curve ecosystem by directing CRV emissions to LPs in the XAI/FRAXBP pool. The SiloDAO is already prepared to incentivize the pool via the use of its vlCVX holdings.

Specifications:

  1. Governance: The SiloDAO controls all admin functions in the Silo Protocol, including the minting and burning of XAI. Delegated members of the DAO have consistently voted in the best interest of the protocol, as seen in over 19 past proposals. In brief, the DAO approves the deployment of new markets, sets interest rates across markets, replaces active price feeds, and registers new price providers, among other functions. There exists NO entity that can upgrade the protocol except the SiloDAO. The SiloDAO implements the OpenZeppelin Governor. A list of all DAO-managed functions can be found here. (System Roles )

  2. Oracles: Silo currently supports the following price providers: Chainlink, Uniswap V3, and Balancer V2. Chainlink is our default price provider, with oracles of Uniswap and Balancer V2 being fallbacks – except for token assets unsupported by Chainlink.

  3. Audits: The core team has formally verified the entire protocol’s contracts, including price oracles, using Certora. The Silo protocol has been audited by two auditors, Quantstamp and ABDK. (Links: Audits & Formal Verification )

  4. Centralization vectors: Silo does not have centralization vectors; all admin functions are entirely under the control of the SiloDAO. The core team’s multi-sig wallet manages the DAO’s development fund as directed by the community.

  5. Market History: XAI is new to the market, but the initial minted supply is 15M. Pending community votes, the SiloDAO will be seeding XAI/FRAXBP with liquidity up to 3M USD and voting for CRV emissions to the pool using the DAO’s CVX holdings.

References:

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