Proposal to add vETH/WETH to the Gauge Controller

Vector_Reserve · February 14, 2024, 2:20pm

Summary:

This is a proposal to enable $CRV rewards for the vETH/WETH gauge on Curve at: Curve.fi

$CRV incentives will increase liquidity, boosting the efficiency of trading and grow user engagement

By incentivizing, we attract committed LPs, which would result in a thriving LRT ecosystem on Curves AMM, positioning curve as a leader for LRT liquidity.

References/Useful links:

Website: https://www.vectorreserve.com/

Docs: https://vector-reserve.gitbook.io/

dApp: Vector Reserve | Home

Twitter: https://twitter.com/vectorreserve

Github: vectorreserve · GitHub

Protocol Description:

vETH is DeFi’s first Liquidity Position Derivative (LPD), introduced by Vector Reserve.

LPDs, or Liquidity Position Derivatives, are a never-before-seen asset class, capturing the yield from various LSTs and LRTs in a diversified fashion - while maximizing the ways to earn yield from each of them.

vETH can be minted using any approved asset on our dApp, and staked to earn yield from the following sources:

Staking and Restaking gains from holding LSTs and LRTs
LP fees from pairing these assets on various DEXs
Upcoming Superfluid Staking: The process of restaking liquidity positions on EigenLayer to earn additional yield. When this feature of EigenLayer goes live, we aim to be the market leader with a large treasury of LST/LRT-based LP positions backing vETH.

This approach allows us to generate best-in-market yield, giving vETH holders an advantage over holding standard LSTs or LRTs.

Our reserve-based utility token, VEC, has a symbiotic relationship with the vETH token. While vETH generates value for the Vector Reserve, being a great source of treasury revenue, VEC is emitted to generate liquidity for vETH pairs across multiple DEXs - ensuring the product remains competitive in all areas. Every VEC token is backed by assets within the Vector Reserve, which grow from a share of yield generated by vETH as well as LP positions acquired through bonding.

With over $30m TVL accumulated across vETH and sVEC since launch, Vector Reserve is pioneering the next stage of the liquid restaking revolution.

Motivation:
The curve vETH/WETH gauge will play an important early role in incentivising liquidity providers to help with the process of bootstrapping initial liquidity. It will then serve as an important source of liquidity for vETH on an ongoing basis, supporting its utility and viability for integration into a range of DeFi protocols.

Specifications:

Governance: Here is a link to the multisig wallet for the owner safe:

https://etherscan.io/address/0xe0EB63B4E18FF1e646ab7E37510E6EaF287AdE3D

Oracles: No external oracles.

Audits: First audit can be viewed here:

github.com

JacoboLansac/audits/blob/main/solo/vector-reserve.md

# Vector Reserve security review

A time-boxed security review of the [**Vector Reserve**](https://twitter.com/vectorreserve) protocol, with a focus on
smart contract security.

Author: [**Jacopod**](https://twitter.com/jacolansac), an independent security researcher.
Read [past security reviews](https://github.com/JacoboLansac/audits?tab=readme-ov-file).

## Findings Overview

| Finding  | Description                                                                                                                                                                      | Severity                 | Status       | 
|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|--------------| 
| \[H-1\]  | An attacker can inflate the share's price of `StakedVectorETH`, and steal all the vETH tokens from other stakers                                                                 | High                     | Fixed        |
| \[H-2\]  | A malicious address can postpone indefinitely the redemption of a victim's bond, making the funds inaccessible to the victim                                                     | High                     | Fixed        | 
| \[M-1\]  | Unaware users will postpone their own redemption date if they make a new deposit before redeeming an existing bond                                                               | Medium                   | Acknowledged | 
| \[M-2\]  | When the owner of `VectorBonding` sets new Vesting terms calling `setBondTerms()`, malicious addresses can force existing bonds of other users to adopt the new vesting terms    | Medium                   | Fixed        |
| \[M-3\]  | VEC transfers can revert when the `VEC` ether balance is 0 at the end of `swapBack()` function, because `vETH.deposit()` reverts with `amount=0`                                 | Medium                   | Fixed        |
| \[M-4\]  | No slippage protection in `VectorBond.deposit()` for BondType `WETHTOLP` will give WETH depositors a less favorable deal when WETH is swapped for VEC                            | Medium                   | Acknowledged |
| \[M-5\]  | Flash arbitrageurs can leverage small deviations between the LST pegs and the exchange rate given by `vETHPerRestakedLST` and slowly drain the protocol reserves                 | Medium                   | Acknowledged |
| \[M-6\]  | The owner of `VectorETH` can withdraw all LST tokens from all users                                                                                                              | Medium  (centralization) | Acknowledged |

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Centralization Vectors: We have a small engineering team, with one lead engineer, but plans and funds are in place to scale as needed. The treasury is currently controlled by the multi-sig wallet.

Market History: Vector Reserve and vETH minting launched on Thursday 25th January 2024. Since then Vector TVL has rapidly accumulated over $30m in TVL. There have been no major volatility events attached to vETH since launch.

Value: We believe in migrating the majority yield pool to wherever the majority of user provided LP is. Therefore, if the Curve pool proves very popular for our community, it is very likely that we will support it to become the primary source of liquidity.

ON-DeFi · February 15, 2024, 3:59pm

This looks interesting.
Curve Liquidity Manager