Proposal to add clevUSD/FRAXBP, clevCVX/CVX, CLEV/ETH pools to the gauge controller

Summary:

Proposal to add CLEV/ETH, clevCVX/CVX, and clevUSD/FRAXBP factory pools to the Gauge Controller to enable users to assign gauge weight and mint CRV. CLever is a risk-reduced lending platform paired with a bond market. Users’ loans are denominated in “clevTokens,” which represent future collateral yields – relevant to this proposal, clevCVX to CVX and clevUSD to FRAXBP. Adding the pools to the Gauge controller would be beneficial for the CLever protocol and complementary to Curve, Convex, and Frax.

References/Useful links:

CLever website: https://clever.aladdin.club
CLEV token address: 0x72953a5C32413614d24C29c84a66AE4B59581Bbf
Documentation: CLever - AladdinDAO
Medium: 0xCLever – Medium
GitHub: aladdin-v3-contracts/contracts/clever at main · AladdinDAO/aladdin-v3-contracts · GitHub
Twitter: https://twitter.com/0xC_Lever
Discord: AladdinDAO

CLEV/ETH pool: https://curve.fi/#/ethereum/pools/factory-crypto-140
clevCVX/CVX pool: https://curve.fi/#/ethereum/pools/factory-v2-209
clevUSD/FRAXBP pool: https://curve.fi/#/ethereum/pools/factory-v2-237

Protocol Description:

CLever is a risk-minimized lending platform for high quality tokens such as CVX and FRAX. CLever loans are denominated in clevTokens, which are assets paired to their specific collateral and representing its future yield. clevTokens are treated as equivalent to their respective collateral by the system, so they carry no risk of liquidation and no exposure to price oracles. CLever does not charge interest on loans, but instead a fixed rate on yield harvests, which means borrowing costs do not change with any pool utilization or liquidity.

CLever builds constructively on Curve ecosystem protocols, expanding farming opportunities and thereby helping to bring more investment and utility. Since launching a limited operation “beta mode” for CVX, CLever has demonstrated strong product-market fit attracting more than 1.2m CVX to the platform and becoming a top holder of CVX.

CLever CVX allows users to supply CVX as collateral and borrow up to 50% LTV in clevCVX. Users’ collateral CVX is locked as vlCVX and used to generate bribe returns via Votium. Bribes are swapped into more CVX and used to pay off the user’s clevCVX debt at par (1:1). The CVX entering the system in this way is placed in the Furnace where it can be claimed at par in exchange for clevCVX (which is burned).

CLever FRAX allows users to mint clevUSD against several Frax-based stablecoin collateral strategies, each with its own maximum LTV and independent yield. For CLever FRAX, all yields are swapped into FRAX, which is used to pay down their clevUSD system debt 1:1, then distributed via its own Furnace with the equivalent burning mechanism to Clever CVX.

In order for borrowers to utilize their borrowed tokens, CLever provides incentivized swap pools pairing each clevToken with its associated collateral. Sufficient liquidity in these pools facilitates swapping with reasonable slippage, and incentives create a yield farming opportunity for LPs of liquid CVX and FRAX with a unique risk profile. Since clevTokens represent future yield rather than a pegged asset (see next section) LP pairs are correlated, limiting the scope of impermanent loss to LPs and making these farms unique in the market.

CLever CVX and FRAX are prototypes for future CLever expansion to other collateral tokens and yield strategies, including the already announced partnership with Stake DAO for Clever CRV.

CLever Synths, the Furnace, and Bond Discount vs. Peg

clevTokens are not wrappers of their underlying collateral tokens. Instead they represent future yield generated by collateral strategies, denominated in the collateral tokens. clevTokens can only be minted against their associated collateral, and only up to the maximum LTV for each given strategy (currently 50% for CVX and 30-50% for FRAX).

clevTokens can eventually all be exchanged for corresponding real collateral tokens at 1:1 via the Furnace, so they can be considered a zero coupon bond with indefinite maturity. If the furnace currently holds collateral tokens the swap is immediate, but users can deposit clevTokens to the Furnace even if there are no collateral tokens currently available. In this case, users share the upcoming harvests proportionally with any other Furnace depositors. New harvests to the Furnace are released linearly over 1-2 weeks (depending on the collateral) which creates a smooth continuous burn rate/bond repayment and prevents timing exploits when the system is oversubscribed. The time required to convert clevTokens into their real underlying asset via the Furnace is determined by the collateral yield rate(s), as well as how many clevTokens are sharing those harvests in the Furnace.

Since clevTokens represent future assets rather than current ones, they can trade at a discount representing the time value of those tokens like any bond. Borrowers swap when the discount is sufficiently small and, on the other side of the equation, users can buy clevTokens from the Curve pool to arbitrage the discount. This arbitrage can be repeatedly looped between the Furnace and the Curve pool as the Furnace converts clevTokens to their paired collateral assets.

CLEV Tokenomics

CLEV is CLever’s native token and it uses Curve’s ve- tokenomic system, with lockers sharing platform revenue and progressively increasing governance power. CLever applies fees to the collateral token harvest yield, the majority of which will be distributed to veCLEV holders. This makes liquidity mining (or bribe payments) more sustainable than simple inflation because CLEV is a proxy for real, ongoing platform revenue in CVX, FRAX, and any future collateral tokens. The operation of CLever makes it a net buyer of CVX and FRAX. Locking CLEV is marketed as a set-and-forget way to earn a growing stable of hodl-worthy tokens.

Motivation:

Increasing liquidity and visibility for the proposed pools via Curve gauges will improve the functionality of CLever overall and CLever CVX and FRAX specifically. It would also be beneficial and additive to the ecosystem in the following ways:

  • CLever’s model directly supports demand for underlying collateral strategies like vlCVX and FRAXBP farms by facilitating the creation of leveraged farming positions.

  • CLever provides unique new farming opportunities and by creation of yield bond markets and (liquid) clevToken-collateral farming.

  • Since swapping through Curve pools forms a fundamental part of both the borrowing and Furnace arbitrage / bond buying processes, increased usage of CLever increases Curve volume.

  • Finally, CLever’s participation in bribe markets will help increase the governance value of both CRV and CVX.

Specifications:

  1. Governance: The CLEV token was deployed by the Aladdin core team. Aladdin continues to develop and administer CLever, progressively decentralizing governance power to veCLEV holders. The CLever treasury is controlled by a 6/9 multisig wallet.

  2. Oracles: CLever does not rely on an oracle for any part of its operation.

  3. Audits: All CLever products have been audited. Reports can be found here: aladdin-v3-contracts/audit-reports at main · AladdinDAO/aladdin-v3-contracts · GitHub

  4. Centralization vectors: vlCVX bribe harvesting is triggered by the team for security reasons, otherwise n/a.

  5. Market History: CLever was launched with CLever CVX beta mode in April and over 1.2 M CVX has been deposited since. The CLEV token was offered in a token offering at a price of 1 CVX for 1 CLEV on Oct 12, 2022. clevCVX and clevUSD are only minted against collateral and are ultimately (over time) redeemable for CVX and FRAX respectively. clevCVX trades at a discount to CVX representing the present value of that future CVX, which is expected behaviour of the system and generally all clevTokens will behave this way. The clevCVX discount will normalize as the large volume of clevCVX that was minted during the beta period is allocated to either farming or swapped for more CVX.

10 Likes

Howdy! My name is Kmets and I am an active participant in the CLever community and a frequent user of the Curve, Convex, and Frax Finance protocols. Just wanted to voice my support for this gauge proposal and note some direct benefits to users of all of the aforementioned protocols:

  • The derivative LPs (clevCVX/CVX and clevUSD/FRAXBP) will be supportive of the underlying tokens CVX and FRAX either directly through incentivized farming and bribing, or indirectly by directing the clevCVX and clevUSD through the furnace and creating a net buy pressure for the underlying CVX and FRAX tokens directly through the Curve protocol.
  • The clevCVX and clevUSD LPs are intended to be “off-peg” (to various degrees), creating an opportunity for an additional defi yield opportunity by arbing the discount and then redeeming the clevtoken for the underlying base token. One clevCVX token will ALWAYS be redeemable for one CVX token, and likewise for clevUSD. The user of CLever’s furnace trades immediate value of the underlying tokens for a time discounted version of the original token. This feature can be utilized in a variety of ways to boost yield for protocols or users.
  • The core team takes the concepts of transparency and safety exceptionally seriously. Audits of the CLever protocol and it’s various clevtoken strategies are readily available on their github. The entirety of the CLever treasury is on-chain and is readily verifiable. Additionally, there are no outside VC or corporate investors, as the protocol has been entirely bootstrapped by defi participants (small fish like yours truly).
As a long-time user of Curve, Convex, and Frax, I strongly endorse the passage of this proposal. It is net beneficial to all three protocols, and will create deeper liquidity for the CVX and FRAX tokens. CLever is intended to be flywheel additive, and I think this proposal does exactly that.
5 Likes

I’m a regular user of convex,curve,clever. I liked the synergies built there.

The bonding market being currently developed by Clever has found a niche. It provides some leverage against coins from the curve ecosystem. In the bear, you can stick to project you believe while getting additional funding on your coins. Not only the wheel is spinning, but it’s piling up a new brick on the curve base-plate.

Adding gauges to the mentioned pools provide

  1. a positive feedback for Clever to contribute & expand the curve ecosystem in synergies with its majors stakeholders (convex, frax).
  2. a financial kicker to make the wheel spinning a bit faster. This means a greater financial incentives and therefore a bigger exposure to attract TVL from the defi. This could be a KPI to track : the increase in TVL pre/post gauge
  3. a better/deeper liquidity for end users while using Clever
5 Likes

Hello, Tokenbrice here; Liquity’s in-house degen, amongst other hats.

I’m supportive and enthusiastic about this proposal overall; it’s neat to see the clexCVX design that found significant PMF being exported to other base assets.

AladdinDAO & Concentrator have already delivered incredible value to the Curve-Layer 3 ecosystem (=built on top of Convex, the second layer). This proposal once again achieves a synergetic interaction between CLever & the three protocols involved: Curve, Frax, and Convex.

Thanks to the redeemability built-in in the clveCVX and clevUSD (Furnace), the risk caused by the additions of the gauges on clevUSD/FRAXbp and clexCVX/CVX is limited.

Bonus points to the CLever team for their prudent guarded launch approach of clexCVX, which has been operating for eight months.

I am excited that the extended Curve ecosystem is densifying even further, creating more options and opportunities for DAOs and individuals harnessing the Curve/Convex flywheel.

5 Likes

hey this is Tao, a new defi user for curve and convex. Unlike other OG, I know Clever first and then do the whole research about the tokenomic for curve and convex. From my personal experiences, it helps me to easily involve in curve eco system with leverage

Also I like the smart design to avoid the liquidation and external oracle.

Hope everyone can vote for this proposal

4 Likes

Following the feedback received from Crypto Risk Team and our internal discussions, for clevCVX-CVX pool, we will reduce the A (amplification coefficient) from 100 to 50. This should help balance clevCVX/CVX pool.

1 Like