Proposal to add tBTC/thUSD [Ethereum] to the Gauge Controller

Gauge Proposals
#1

Summary:

Proposal to add gauge support for the tBTC/thUSD pool on Ethereum.

References/Useful links:

Link to:

Protocol Description:

tBTC is a permissionless wrapped Bitcoin, that is 1:1 backed by mainnet BTC. tBTC is trust minimized and redeemable for mainnet BTC without a centralized custodian.

thUSD is a collateralized stablecoin Bitcoin based on a fork of Liquity protocol. Interest free thUSD loans are created when a user deposits tBTC and ETH as collateral with a minimum collateral ratio of 110%. Undercollateralized positions are liquidated by the protocol, and collateral is sold to maintain a minimum system-wide collateralisation of 150%.

Users are able to deposit thUSD in the stability pool, which closes at-risk troves and distributes the collateral pro-rata to stability pool participants. Fees are collected for loan origination and redemption.

Motivation:

This proposal aims to add a veCRV gauge for the Curve tBTC/thUSD pool on Ethereum.

thUSD has successfully launched and is growing. The key directives of the growth phase are to add functionality and to continue to increase liquidity on Curve.

The DAO has budgeted T token bribes to incentivise this pool, with the goal to attract liquidity to the pool and continue to position Curve as the centre of thUSD liquidity on Ethereum.

Specifications:

1 Governance:

tBTC operates on Threshold DAO’s decentralized threshold encryption protocol. Threshold DAO is governed by the network’s work token, T. T token holders govern the DAO via proposals raised to the Threshold forum, which can be raised to a vote via Snapshot, as well as the on-chain Governor Bravo module via Boardroom.

tBTC contract deployments are currently managed via the Council multi-sig, a 6-of-9 multi sig managed by trusted community members: 0x9F6e831c8F8939DC0C830C6e492e7cEf4f9C2F5f

In the future, all contract authorities will be passed to the Governor Bravo contract.

thUSD operates as a collection of immutable smart contracts. As a Liquity fork, these contracts have been rigorously stress tested in a real-world scenario. Threshold has also sought independent audits.

The parameters that can be adjusted by the DAO are: the amplification factor of the BAMM contract, thUSD price feeds (Chainlink and Tellor), and thUSD collateral options.

These parameters are managed by the Threshold DAO via the Governor Bravo on-chain governance system.

2 Oracles:

tBTC does not rely on an oracle price feed.

thUSD uses two price oracles to determine system collateralization, which are supplied by Chainlink and Tellor.

3 Audits:

tBTC Audits

tBTC Immunefi Bug Bounty: Threshold Network Bug Bounties | Immunefi

thUSD Audits

thUSD Immunefi Bug Bounty: Threshold USD Bug Bounties | Immunefi

4 Centralization vectors:

Threshold Network governance is decentralized, and updates are ratified by the DAO.

tBTC contract updates are currently managed by the Council multi-sig.

thUSD parameters are governed by Threshold DAO, which operates via a decentralized on-chain governance system.

Updateable parameters are: the amplification factor of the BAMM contract, thUSD price feeds (Chainlink and Tellor), and thUSD collateral options.

Parameter changes require an on-chain governance cycle to change.

5 Market History:

tBTC is a wrapped BTC token, and is pegged to the price of BTC. Since launch, tBTC’s price has not significantly diverged from that of BTC. tBTC launched in January of 2023, and currently has ~3400 BTC to collateralize the ~3400 tBTC.

thUSD is a collateralized stablecoin backed by ETH and tBTC. It targets a 1:1 peg with USD, and is built on a sophisticated automated system that achieves price stability by liquidating undercollateralized troves. Liquid thUSD can be used to close at-risk troves, or pay back debt.

Since launch, thUSD’s price has not significantly diverged from that of USD. thUSD launched in April of 2024, and currently has ~117 tBTC ($7.32M) & ~54.2 ETH (~$131k) to collateralize the ~3.1M thUSD.

The tBTC/thUSD pool has recently been created.

Link to pool: https://etherscan.io/address/0xb79bbc5c96ba248e10c1bdac1a2b83790ff22b7f

Link to gauge:
https://etherscan.io/address/0x4e057701a76de5b7ade2fcca2b6761325646f8fa

Value:

The new tBTC/thUSD pool on Curve is intended to provide new functionality for thUSD holders (ability to long BTC) as well as enhance thUSD price stability.

Threshold has allocated T incentives to bootstrap liquidity via incentivised bribes on Warden. Similar programs have successfully bootstrapped tBTC liquidity in the past.

Our goal is to create deep, sticky liquidity on Curve and benefit from existing orderflows. This will serve to increase TVL and volume on Curve.

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