Proposal to add the pyUSD/USDC pool to the Gauge Controller
Summary:
Proposal to add pyUSD/USDC Pool to the Curve Gauge Controller.
Pool deployed here.
References/Useful links:
Link to:
- Website: PayPal Stablecoin | US Dollar Cryptocurrency | PayPal US
- Issuer: Paxos pyUSD Overview
- October Report: October Transparency
- September Attestation: Withum Attestation
- Defillama: pyUSD Page
Description:
PayPal is a globally recognized leader in the payments and remittance industry. Its entrance to the crypto space with the launch of pyUSD represents a significant step into the Web3 world as the company looks to expand and improve its product offerings.
Launched in August 2023, pyUSD is a partnership between PayPal and the Paxos Trust Company, whose previous assets include USDP and BUSD. The code for pyUSD is built on Paxos previous success with the aforementioned USDP token. Paxos is a New York State Department of Financial Services regulated Trust that acts as a qualified custodian of fully bankruptcy remote and segregated funds. Paxos issued coins such as pyUSD are always redeemable 1:1 and its reserves are held in cash and US Treasuries.
While the pyUSD/USDC pool currently holds no funds Trident is working with partners to provide deep liquidity to the pool in the very near future.
About Trident
Trident Digital is an experienced digital asset solutions provider that works with counterparties to achieve a number of goals across the crypto space. We aim to scale stablecoin adoption both within and outside the crypto market through strong relationships and experience navigating both the crypto and traditional finance markets. Our previous on-chain work includes facilitation of incentives for the USDP-PSM.
Motivation:
This proposal aims to add the pyUSD/USDC pool to the Curve Gauge Controller, a pool made up of pyUSD and USDC. By including this pool in the Curve ecosystem, we aim to deepen liquidity, increase trading volume, and provide a more efficient trading experience for pyUSD users, improving the overall user experience for PayPal customers.
Currently any non-retail user of pyUSD faces significant slippage when swapping pyUSD to other stables, this presents significant barriers to large scale adoption of the token. In concert with this proposal Trident is working with large capital allocators to provide deep liquidity for the pair.
Specifications:
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.
Paxos is a centralized entity functioning in a similar way to Circle, the issuer of USDC. There is no governance structure outside of that dictated by the New York State Department of Financial Services.
All pyUSD is issued 1:1 against funds held in either cash or US Government Treasuries. All funds backing pyUSD are held bankruptcy remote with New York Banking laws protecting customer funds from being used to satisfy any debt of Paxos.
Oracles: Does the protocol rely on external oracles? If so, provide details about the oracles and their implementation in the protocol.
There is currently no on-chain oracle for pyUSD with deep liquidity in this pool being a major barrier to the creation of one.
On the off-chain side Paxos works with Withum, a nationally-ranked audit firm, in order to provide timely monthly attestations of reserves backing pyUSD.
Audits: Provide links to audit reports and any relevant details about security practices.
PayPals pyUSD underwent an audit with the well recognized Trail of Bits in December of 2022 in order to identify any “…flaws that could result in a compromise of confidentiality, integrity, or availability”. The audit did not uncover any significant flaws or defects that could impact system confidentiality, integrity, or availability.
A historical database of monthly attestations and reports for the underlying assets of pyUSD can be found on the Paxos website as prepared by WithumSmith+Brown, PC.
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.
Besides those inherent to any Trust operated in the space, pyUSD doesn’t face any significant centralization issues. All pyUSD is minted 1:1 against Paxos custodied funds and the engagement of Withum provides regular transparency and insights into the assets held.
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?
Since launch pyUSD has observed strong peg performance with low volatility. Monthly attestations have lined up consistently with on-chain mints.
The Curve pool was launched on 11/20/2023, while it currently has no TVL (and as such has had no volume) Trident is working with counterparties to quickly deploy TVL in the order of tens of millions of dollars. Trident will also be undertaking the use of incentive markets in order to drive TVL to the pool. The pool’s success over the coming weeks will additionally allow for the launch of the aforementioned Chainlink oracle for pyUSD which will allow its inclusion in various lending and CDP protocols.
We couldn’t be more excited to begin this journey with the Curve ecosystem!
