Proposal to add the alUSD/sDOLA to the Curve Gauge controller

Gauge Proposals
#1

Proposal to add the alUSD/sDOLA to the Curve Gauge controller

Summary:

Proposal to add the following pool to the gauge controller: alUSD/sDOLA

  • Pool deployed here
  • Gauge deployed here

References/Useful links:

Inverse Finance:

Alchemix:

Protocol Description:

Inverse Finance

Inverse Finance is an on-chain decentralized autonomous organization that develops and manages a suite of permissionless and decentralized financial products using blockchain smart contract technology. Originally founded by Nour Haridy in late 2020, the protocol is now governed by Inverse Finance DAO, a collective of crypto enthusiasts.

Inverse Finance’s main products are:

  • FiRM, a fixed-rate lending market
  • DOLA, a stablecoin pegged to the US Dollar
  • sDOLA, yield-bearing version of the DOLA stablecoin
  • DBR, a new DeFi primitive that enables holders to service a DOLA loan on FiRM.

DOLA is a debt-backed USD stablecoin which is added into and removed from circulation;

  • On the supply side of money markets, such as DAO-owned protocol FiRM, by Inverse Finance’s “Fed” contracts and is then made available to be borrowed through over-collateralized loans.
  • Via injection/contractions into pools such as the Curve DOLA/FraxPyusd, DOLA/USDC on Velodrome, DOLA/USDC on Balancer and DOLA/USDC on Aerodrome.

Alchemix

Alchemix is a DeFi protocol that introduces innovative, self-repaying loans through the tokenization of future yield. By depositing collateral into yield-generating strategies, users can mint synthetic assets, such as alUSD, representing their future yield. These synthetic assets can be used freely within the DeFi ecosystem while their loans gradually repay themselves through the yield generated by the underlying collateral.

Key Features:

  • Self-Repaying Loans: Borrowers can access funds without the risk of liquidation, as loans are repaid using yield over time.
  • Synthetic Assets (alAssets): Tokens like alUSD and alETH are pegged to their respective values and backed by yield-bearing collateral.
  • Flexibility and Utility: alAssets can be used in trading, liquidity provision, or other DeFi applications, offering users immediate liquidity without forfeiting future yield.

Alchemix empowers users to unlock the value of their assets, combining innovative financial mechanisms with user-centric design.

Motivation:

This proposal seeks to add the alUSD/sDOLA pool to the gauge controller. This pool utilizes the stableswap-ng technology of Curve Finance protocol with sDOLA, an ERC4626 yield-bearing stablecoin. This proposal represents a continuation of the Inverse Finance DAO and Alchemix Protocol joint partnership, which started on Optmism, extended to Arbitrum, and now comes to Ethereum via Curve Finance. The protocol plan to use CRV rewards to incentivize liquidity providers to the new pool on Curve.

Specifications:

Please answer in a short and clear manner.

  1. Governance: Provide current information on the protocol’s governance structure. Provide links to any admin and/or multisig addresses, and describe the powers afforded to these addresses. If there are plans to change the governance system in the future, please explain.

Inverse Finance

Decisions for the DAO are made by using INV in the Governor Mills voting contract but as it takes a minimum of five days to vote through a proposal, Inverse Finance DAO has delegated decision-making power to several working groups with limited autonomy and budget. The scope of these working groups is determined in their proposals and they exist to meet fast moving market conditions, to transfer specific or minor decisions to relieve token voters from information overload, and to create a reliable and enjoyable work environment.

Working groups are held accountable to DAO governance, are required to produce progress reports and periodically apply for budget renewals. Delegates have insight into all discord conversations and working groups can be altered or disbanded by a DAO vote.

A detailed description of our governance can be found here.

Alchemix

Alchemix governance is community-driven, with ALCX token holders participating in decisions through Snapshot voting. Proposals start as community discussions and progress to off-chain signaling (“Alchemixed Opinions”) requiring 50 ALCX to post. Approved ideas move to Alchemix Improvement Proposals (AIP), needing 35,000 ALCX quorum for final approval. Execution is handled by relevant multisigs.

Key Multisigs:

  • Developer Multisig: Manages protocol operations and admin controls.
  • Timelock Multisig: Oversees key protocol functions with a delay for transparency.

Future governance plans aim to decentralize further by empowering veALCX holders. For more details, see Alchemix DAO Governance.

  1. Oracles: Does the protocol rely on external oracles? If so, provide details about the oracles and their implementation in the protocol.

Inverse Finance

The Fixed Rate Market or “FiRM,” is Inverse Finance’s Fixed Rate Market lending protocol. FiRM makes use of Chainlink price oracles or Curve’s ema, depending on the market, in combination with our native Pessimistic Price Oracle (PPO). This novel approach to price oracles for borrows and liquidations in FiRM uses the lower of two recorded prices: either a) the current collateral price on the oracle feed, or b) the 48-hour low price as observed by the PPO on the oracle feed, divided by the collateral factor. For example, if the current Chainlink price for wETH is $1,500, the 48-hour low was $1,000 and the collateral factor is 80%, the PPO returns $1,250. ($1,000 / .80 = $1,250).

Note: for some assets without a Chainlink price feed (such as cvxCRV, cvxFXS, INV), Curve’s EMA oracle (found in ng pools) is used instead.

Alchemix

Alchemix relies on external oracles to ensure accurate pricing of collateral and synthetic assets within its protocol. Primarily, Alchemix utilizes Chainlink Price Feeds, a decentralized oracle network renowned for its security and reliability. These oracles provide real-time price data essential for the protocol’s operations, including:

  • Collateral Valuation: Determining the value of assets deposited by users to maintain appropriate collateralization ratios.
  • Minting Synthetic Assets: Accurately valuing synthetic assets like alUSD to ensure they are minted at correct rates relative to their underlying collateral
  1. Audits: Provide links to audit reports and any relevant details about security practices.

Inverse Finance
Inverse Finance has undergone multiple audits, including the likes of yAudit, Nomoi, Peckshield and DeFiMoon. Inverse has also hosted a bug bounty contest on Code4rena to conduct a comprehensive audit of FiRM, and has an active bug bounty program live on ImmuneFi. All relevant audit information can be found here. The DAO also has dedicated members overseeing risk, what we call the Risk Working Group.

Alchemix

​Alchemix prioritizes security through comprehensive audits and proactive measures:

Audit Reports:

  • Alchemix v2 Audit: Conducted by Runtime Verification, this audit assessed the core system, including contracts like “AlchemistV2” and “TransmuterV2.” The full report is available here.
  • Code4rena Contest: Alchemix hosted a one-time security contest through Code4rena to identify potential vulnerabilities.

Security Practices:

  • Bug Bounty Program: An ongoing program on Immunefi incentivizes the community to report security issues.
  • Internal Reviews and Risk Monitoring: Regular internal security assessments and risk monitoring tools are employed to maintain protocol integrity.
  1. Centralization vectors: Is there any component of the protocol that has centralization vectors? E.g. if only 1 dev manages the project, that is a centralized vector. If price oracles need to be updated by a bot, that is a centralized vector. If liquidations are done by the protocol, that is also a centralization vector.

Inverse Finance

The protocol itself is completely decentralized, and requires no human interaction to work as is. However, DAO working groups have been formed and are active in order to improve efficiencies is various operational areas within the DAO. Often, these working groups will have a Multisig wallet that the DAO governance awards certain roles and limited treasury asset allowances in order to carry out required work. All granted privileges and allowances can be reclaimed/disabled by INV token controlled governance. These are:

  • Treasury Working Group (TWG): 3 of 5 Multisig with allowances giving access to Treasury funds to optimize treasury management.
  • Risk Working Group (RWG): 1 of 3 Multisig with privileges to pause actions in our (now disabled) lending market.
  • Policy Committee (PC): 5 of 9 Multisig that can change staking reward rate to INV stakers.
  • Fed Chair: 4 of 7 Multisig with the operator role on DOLA Fed Contracts, which allows for DOLA to be expanded/contracted under the Fed smart contract logic (bounded by market conditions)

Please see our Multisig Wallet section of the transparency portal here.

Alchemix

Alchemix is designed to minimize centralization vectors, promoting a decentralized and resilient protocol. Key considerations include:

  1. Governance:
  • Alchemix operates as a decentralized autonomous organization (DAO), with ALCX token holders participating in governance decisions.
  • Proposals are discussed within the community and voted on via Snapshot, ensuring a transparent and inclusive decision-making process.
  1. Multisig Wallets:
  • Certain protocol functions are managed by multisignature (multisig) wallets, requiring multiple approvals to execute actions.
  • This setup enhances security and decentralization by distributing control among trusted members.
  1. Oracles:
  • The protocol relies on decentralized oracles, such as Chainlink Price Feeds, to obtain accurate and tamper-resistant price data.
  • This approach reduces reliance on centralized data sources and mitigates associated risks.
  1. Liquidations:
  • Alchemix offers self-repaying loans that are non-liquidating, eliminating the need for external liquidation mechanisms.
  • This design choice enhances user security and autonomy.
  1. Market History: Has the asset observed severe volatility? In the case of stablecoins, has it depegged? In the case of an unpegged asset, have there been extreme price change events in the past? Provide specific information about the Curve pool: how long has it been active, TVL, historical volume?

The DOLA stablecoin is soft pegged to $1, and like fully decentralized, over-collateralized stablecoins, can experience some volatility around this peg. Larger deviations (below $0.99) often recover fast due to the repegging mechanism built into the protocol (increasing borrowing cost on FiRM, AMM Fed contractions).

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alUSD is equally soft pegged to $1, meaning it can experience volatility from time to time. alUSD maintains its peg to the US dollar through its underlying collateral and redemption mechanisms. Users mint alUSD by depositing yield-generating assets, and the peg is reinforced as alUSD can always be redeemed for its proportional share of the underlying collateral. This ensures stability and value alignment with the US dollar.

#2

The proposal is now live for voting!

Curve: https://dao.curve.fi/#/ethereum/proposals/914-OWNERSHIP
sdCRV: Stake DAO | Governance
Convex: Snapshot