Remove alUSD gauge so the pool stop receiving CRV. As pointed out by community members, alUSD is collaterized by Yearn Vaults which make around 25% of their yield from dumping CRV. We would like to propose to remove the gauge from Curve as this essentially allows leveraged CRV farming via Alchemix as the Alchemix loaned is paid back using interest from Yearn vaults selling CRV to accrue interest without mentioning alUSD can also be deposited into Yearn vault leveraging the amount of CRV received.
This is somewhat of an unusual proposal and it will also be used as as a way to test community sentiment on having CRV receiving gauges on pools which source their yield from CRV. Itâs also worth noting that Curve stable pools will likely become fully permisionless in the near future (like it already has for metapools) meaning the process to get listed and obtain a gauge will change although this is will be discussed at a later date.
Motivation:
Whilst we believe Yearn-type farming of CRV is fair game, we donât think it should be incentivized by more CRV as it creates a negative loop for CRV.
Currently, the yvDAI has around $750m in TVL with approximately 25% selling CRV compounded via another $100m in the alUSD vault selling 100% CRV (and CVX).
Was any of this unknown before the vote to add the gauge?
This seems related to Alchemix choosing to give rewards for alETH through Saddle rather than through Curve and not to any dumping mechanics behind alUSD.
In addition, by this same logic, shouldnât gauges for other pools that use yEarn such as the busd pool & others not be rewarded as well?
This is being referred as double dipping because alUSD earns yield from CRV vaults and then receives CRV. This is seen as essentially incentivizing with CRV a derivative product that dumps CRV. Seems counter intuitive hence the proposal which is, by the way, just a proposal and the chance for governance to point out if they think this is stupid.
Yearn has vaults on all Curve (almost?) pools which is a completely separate thing.
I see people agreeing and people disagreeing, the vote will be up shortly and governance can decide, thatâs how it works.
Well, if gauge is granted to the pool, and that pool(alUSD) become to receive governance and ecosystem token(CRV) it supposes to have healthy behavior and play part on governance and ecosystem development, not just dump what is given for him.
So alUSD has to change approach or release gauge for projects with better commitment.
P.S. Gauge voting proposals have to become mature and go for deeper review of pools.
The whole point of Defi is to allow free markets. Why shouldnât they be allowed to dump the coin? At worst if the coin is useful it makes it cheaper for other people to grab if they believe in its future.
Let free markets be free or we will lose some of our highest yielding pools to other protocols.
alUSD drives demand for Curve liquidity intrinsically.
Would it be preferred if it didnât?
alUSD needs to be liquid to drive that demand.
Would it be preferred if it wasnât?
alUSD âdouble dipsâ volume, fees earned, TLV on Curve as well.
Would it be preferred it if didnât?
Ultimately Curve is seeking to provide the best experience for like pegged assets. Many of these assets earn yield under the hood. The ability for an asset to earn yield under the hood is a feature I love about Curve.
The future holds many assets which will be earning yield, and if we want Curve to be the best place to earn on like pegged assets we have to expect the trend will be for more of these assets to be sourcing their yield through Curve, with a need to trade against the pegged asset.
We have here an opportunity to tell the market either:
a) Curve will serve these assets as first class citizens
b) Curve will not serve these assets as first class citizens, and thus a new market will form to fill that need.
I prefer option a. I want the market to have confidence Curve will be the host of all major like pegged swaps. I donât think its in our best interest to tell the market a competitor is needed.
Sure the market can exist without the gauge, but I firmly believe the gauges play an extremely useful function and a lack of them will be perceived as less useful
(just to add, yDAI, where alUSD is deposited under the hood, supports multiple simultaneous strategies and 100% of the underlying liquidity is not even âdouble dippingâ)
Agreed that double dipping shouldnât be permitted. Hopefully Convex votes similarly since unfortunately Yearn has a vested interest in permitting this.
Also just to point out here: the copycat project should be pursued by Curve DAO to protect the rights of $veCRV holders. Those VCs have passthrough liability.
No such thing as double-dipping. Curve incentivises liqudity by paying CRV per amount of liqudity provided. Projects like Alchemix or abracadabra essentially are leverage LPing Curve. They provide more liquidity, so they get more rewards. There is no double-dipping as they get their fair share of rewards based on how much liquidity they provide.
This is a reductionist way to look at an issue. This is why finance people cut everything when they compare two numbers and then wonder why their companies fall apart.
Doing this will slowly allow competitors to see a space that needs to be filled. The benefit to crv holders on certain pools by changing this will be dwarfed by the market share stolen by competitors that DO offer rewards. What will crv holders do then?
Yes. Do you realize the same could be said about every single pool, 33 pools come out with a worse justification.
Do you feel the gauge provides value? If not why do we have the gauge at all?
I personally do think the gauge provides value, but the main questions are:
Does CurveDAO intend to treat any product which uses curve for intrinsic yield as a second class citizen?
if 1, Does CurveDAO see a market which hosts like peg swaps for assets which use curve under the hood to be an inevitable end of denoting these tokens second class on Curve?
if 2, Does CurveDAO incentivizing competitive markets to fill a void it refuses to serve result in Curveâs best interests being met.
I wouldnât call Citizens those pools whos LPs do not hold veCRV. Because they just come, dump CRVs they got for free(for few ââtradingââ fees).
Answering in general,
Those metapools, who dump CRV 100% shall have gauge weight equal to their share of TVL/2 (their 3Pool part). That would be fair treatment and yes it is achievable by meaningful weight voting.