Proposal to add CADC/USDC to the Gauge Controller

Gauge Proposals
#1

Summary:

Proposal to add CADC/USDC Factory Pool to the Gauge Controller to enable users to assign gauge weight and mint CRV.

CADC is a fiat-backed stablecoin (based on USDC) issued by PayTrie (a fiat on-ramp) in Canada. This proposal is submitted jointly by PayTrie and DFX, an AMM designed for non-USD stablecoin swaps. It is in DFX’s interest to promote deep liquidity for CADC in order to advance the non-USD stablecoin ecosystem.

References/Useful links:

CADC

DFX

Protocol Description:

CADC is an ERC20 token, based on a fork of USDC FiatTokenV2, backed 1:1 by real Canadian Dollars. Each CADC is issued by PayTrie, a registered Money Services Business (M19690633) regulated by FINTRAC, Canada’s financial intelligence unit.

CADC’s price history is tracked here on CoinGecko. Historically, CADC has kept its peg true to the Canadian Dollar. DFX is an AMM with optimal pricing using a Chainlink oracle, and thus ensuring on-chain prices extremely close to the underlying Canadian Dollar. The anomaly in the CoinGecko chart is an error due to inverting the pair (i.e. USDC/CADC instead of CADC/USDC). This has been reported to CoinGecko and they are working on it.

DFX is also an interested party to this proposal due to its mission to grow the non-USD stablecoin ecosystem. Two of the founders of DFX are also founders of PayTrie, the issuer of CADC.

All PayTrie and DFX founders are public (please see LinkedIn link above) and previously worked at ConsenSys, UMA, and the Ethereum Foundation. DFX has also already seeded $478K of assets into the CADC/USDC pool and has purchased and locked $150k worth of CVX to promote future incentivization and signal commitment to the Convex/Curve community.

Motivation:

The usefulness of a stablecoin directly correlates to its availability throughout the market. Compared to the Canadian dollar’s presence in traditional financial markets, a Canadian dollar stablecoin does not have deep liquidity in DeFi yet. Curve being a cornerstone protocol, an incentivized inclusion on Curve provides visibility to CADC and brings a mature ecosystem with existing integrations to other protocols. Curve incentivization would help CADC reach critical mass to become a fiat-backed alternative to USD within DeFi and provide further diversification to DeFi as a whole.

Independent of crypto market sentiment, stable swaps are also useful in various hedging strategies and for large institutional-level transfers. We believe these pools will naturally accumulate liquidity over time and facilitate outsized swap volume to their TVL.

As for DFX, an additional CADC pool creates opportunities for the market to arbitrage and for DFX to provide other exploratory services.

Specifications:

  1. Governance:

The CADC token contract was deployed by PayTrie and its current “Owner” role is the PayTrie multisig wallet: 0x3E30d340C83d068d632e11B5a30507ce973D7700. Similar to USDC, the owner of the CADC contract will have the ability to blacklist accounts with stolen tokens.

  1. Oracles:

CADC does not use any oracles in its implementation as CADC is a fiat-backed stablecoin. However, CADC’s largest pool of liquidity is on DFX, an AMM that uses Chainlink for its real world forex price feeds to facilitate efficient stablecoin swaps close to the spot price. Such feeds are found here: Decentralized Price Reference Data | Chainlink

  1. Audits:

CADC uses the same code as USDC which secures over $45B worth of assets. Its source can be viewed in the links above, and the security audits for USDC’s FiatTokenV2 smart contract all apply to the smart contract code of CADC.

  1. Centralization vectors:

One centralization vector is that of the CADC issuer, PayTrie. It has a 2 of 3 multisig that is authorised to mint/burn tokens and blacklist addresses. See above section on Governance.

  1. Market History:

The CADC token has not experienced significant volatility or depegging against the Canadian dollar due to its 1:1 backing with fiat currency. CADC has been active since January 14, 2021 and currently holds approx. $6.7MM USD TVL on DFX’s AMM between Ethereum and Polygon. The Curve pool was newly created on February 9, 2022 and seeded with $478K USD in liquidity pool assets.

  • Yes
  • No
  • Abstain

0 voters

18 Likes
#2

Hi. Thanks for using the new and improved gauge proposal format! I had a few questions:

  1. Can you give us the addresses and the names of owners who sign the multisig transactions?
  2. Can you give us a view into how the minting process occurs? Who’s minting these CADC?
  3. What is your relation to CirclePay, the primary (and sole) issuer of USDC?
  4. How does the blacklisting process work? Multisigs are slow: can you react quickly to blacklist ‘bad’ actors?
  5. How can one assess the collateralisation ratio of CADC?
  6. What kind of failsafe mechanisms does PayTrie have to prevent bad debt?

Looking forward to your response!

8 Likes
#3

Co-Founder of PayTrie here. CADC is a fiat-backed Canadian dollar stablecoin where funds are held in a Canadian financial institution 1:1 with minted CADC. There is always more CAD in the bank account than there are outstanding CADC circulating.

  1. This is a 2 of 3 multisig with the co-founders. Only the co-founders can sign to mint CADC.
  2. PayTrie holds a float of CADC for operational purposes by locking up our own capital. This reduces the need to mint/burn on a day to day basis. For large orders that exceed the float, they are minted when the funds are sent to the reserve banking account.
  3. There is no relation between Circle and CADC.
  4. Blacklisting is on an adhoc and fraud/theft prevention basis. The PayTrie team will use their discretion when blacklisting addresses. It is not an automated process and should not be. Signing the multisig is not much slower than signing a regular transaction and the decision process to blacklist is likely going to take much longer than the blacklisting process itself.
  5. CADC is always overcollateralized.
  6. There is no debt to be taken on CADC. There is no instance where bad debt can occur in the system as the funds are NOT used for lending.

Hope this addresses your questions and feel free to ask any follow-up questions.

11 Likes
#4

As a user and now developer with DFX, I wanted to add some personal motivations. As a Canadian DeFi user, I primarily want more opportunities to use a CAD stable throughout crypto.

It makes my own taxes and planning easier as well as educating new users. Being able to directly go from CAD in my bank account to CADC, without having to convert to USD is great. The next step is making it more generally available so other protocols can easily integrate it. The visibility of Curve would help CADC reach this critical mass for usefulness and being a fiat-backed stable seems like it would naturally attract liquidity (from people like me) for Curve.

With PayTrie’s support for Canadian bank e-transfers, it has a good reputation (1, 2, 3) that provides a very direct, familiar approach to connecting Canadians into DeFi.

12 Likes
#5

:canada: Canadian perspective: Almost everyone I know uses cryptocurrency, or holds some form of cryptocurrency and one of their biggest concerns is how to cash in and out to CAD.

Now we have CADC, - our own stable coin - which makes sense to me and my community because it’s in our native currency and made for Canadians, in Canada, by Canadians.

Now moving forward, I want to see more opportunities for Canada to get involved in DeFi.
We need to deepen available liquidity and develop awareness.

I am part of both the Curve/Convex community ; to me it’s the obvious decision to have a CADC pairing(s) added to the gauge controller. There is massive group waiting to add liquidity in CADC.

I also use PayTrei to on/off ramp CAD. I have only ever had an excellent experience with the services:

12 Likes