Vote 015: Gro protocol strategy selection whitelist

Background and summary

  • Over the past week there has been significant losses incurred by Vault users as part of the UST de-peg
  • There will be a future review of this separately, including discussion around risk management and possible compensation options
  • As an urgent priority however we should confirm whether the DAO is comfortable with the current strategies in place, together with new proposed strategies to replace UST

Vote 015: Whitelist selected Convex strategies for use in Gro protocol

Gro protocol has been designed to use Convex pool strategies following Gro DAO Vote 009. All these strategies pair 3CRV with a different stablecoin (except the 3CRV pool itself which just has DAI, USDC and USDT).

That means each strategy has full exposure to each of the 3CRV assets plus whichever stablecoin is also in the pool. As we saw with UST wormhole, if any of the assets moves off-peg then this results in a loss for the strategy as a whole.

Proposal that Gro DAO approves the following Convex strategies as yield strategies for the protocol to use (each one with 50% max Vault exposure):

  1. MUSD-3CRV
  2. MIM-3CRV
  3. FRAX-3CRV
  4. LUSD-3CRV
  5. OUSD-3CRV
  6. ALUSD-3CRV
  7. FEI-3CRV
  8. TUSD-3CRV

Note: 3CRV pool has been removed for now as this requires a separate technical implementation which is not yet coded.

Strategy 1: MUSD-3CRV

  • Created by mStable and backed by stablecoin collateral (similar design to PWRD)
  • Relatively low depth in the pool meaning at higher volumes there would be greater slippage
  • Live for 22 months with a DeFi safety score of 93% and market cap of $50m
  • Read more here: https://docs.mstable.org/
  • Link to pool: Curve.fi (pool depth: $34m as at 16th May)
  • Current Convex yield 8.25% (as at 17 May)

Strategy 2: MIM-3CRV

  • Created by Abracadabra and fully backed by a variety of collateral, which no longer includes UST
  • Live for 10 months with a DeFi Safety score of 43% and market cap of $1.9bn
  • Read more here: https://docs.abracadabra.money/
  • Link to pool: Curve.fi (pool depth: $255m as at 16th May)
  • Current Convex yield 15.28% (as at 17 May)

Strategy 3: FRAX-3CRV

  • Created by Frax and partially backed with a combination of ~85-90% collateral and FXS (governance token)
  • Live for 17 months with a DeFi Safety score of 81% and a market cap of $1.5bn
  • Read more here: https://docs.frax.finance/
  • Link to pool: Curve.fi (pool depth: $1.36b as at 16th May)
  • Current Convex yield 7.41% (as at 17 May)

Strategy 4: LUSD-3CRV

  • Created by Liquity and overcollateralised (at 110%) with ETH
  • Live for 13 months with a DeFi Safety Score of 97% and market cap of $350m
  • Read more here: https://docs.liquity.org/
  • Link to pool: Curve.fi (pool depth: $88m as at 16th May)
  • Current Convex yield 6.12% (as at 17 May)

Strategy 5: OUSD-3CRV

  • Created by Origin and backed by stablecoin collateral (similar design to PWRD)
  • Live for 20 months with a DeFi Safety score of 86% and a market cap of $60m
  • Read more here: Introducing OUSD - OUSD
  • Link to pool: Curve.fi (pool depth: $30m as at 16th May)
  • Current Convex yield 8.53% (as at 17 May)

Strategy 6: ALUSD-3CRV

  • Created by Alchemix and backed by stablecoin and ETH collateral
  • Live for 15 months with a DeFi Safety score of 44% and a market cap of $180m
  • Read more here: Getting started - User docs
  • Link to pool: Curve.fi (pool depth: $53m as at 17th May)
  • Current Convex yield 12.59% (as at 17 May)

Strategy 7: FEI-3CRV

  • Created by Fei Protocol (Tribe DAO) and partially-backed by a mixture of volatile collateral (mainly ETH) and algorithmic backing (buy-backs using TRIBE)
  • Live for 13 months with no DeFi Safety score and a market cap of $540m
  • Read more here: Overview | Tribe DAO Docs
  • Link to pool: Curve.fi (pool depth: $43m as at 17th May)
  • Current Convex yield 3.44% (as at 17 May)

Strategy 8: TUSD-3CRV

  • Created by TrustToken and backed 1:1 by fiat collateral
  • Live for 50 months with a DeFi Safety score of 84% (for TrueFi) and a market cap of $1.22bn
  • Read more here: https://www.trusttoken.com/products
  • Link to pool: Curve.fi (pool depth: $80m as at 17th May)
  • Current Convex yield 2.57% (as at 17 May)

Next steps

Given the time sensitive nature and the current market volatility, the vote will start on https://vote.gro.xyz today and run for 3 days.

Future strategies can be suggested and voted on by the DAO, and at any time community members can also propose a removal of a strategy from the current whitelist.

Vote is now live at Snapshot :purple_heart:

Current whitelist results: FRAX and MIM out, LUSD and OUSD in

Currently the DAO is voting to remove FRAX and MIM and replace with lUSD and oUSD. mUSD remains in place

FRAX and MIM have the two of the largest TVLs out of Convex stablecoin pools (at $1.38bn and $259m respectively) and have yields of 7.8% and 16.1% currently

It will be interesting to see how this plays out and would be also great to hear from community members as to their concerns for MIM/FRAX (at lower % allocation than today), and whether those concerns would be effectively mitigated with an agreed stop-loss strategy.

Still 2+ days for voting so of course this may change

UPDATE: VOTE RE-FORMULATION

After just under 24hrs of voting we have seen that voters may be getting confused by the multiple choice options.

Following user feedback we will set up each strategy as a separate DAO vote.

We are also going to include additional stablecoin pools to choose from
which will be updated above

Votes are now live on http://vote.gro.xyz and split into 8 votes - one each for a shortlisted Curve/Convex pool strategy

Vote 015A: Whitelist MUSD-3CRV Convex strategy

Vote 015B: Whitelist MIM-3CRV Convex strategy

Vote 015C: Whitelist FRAX-3CRV Convex strategy

Vote 015D: Whitelist LUSD-3CRV Convex strategy

Vote 015E: Whitelist OUSD-3CRV Convex strategy

Vote 015F: Whitelist ALUSD-3CRV Convex strategy

Vote 015G: Whitelist FEI-3CRV Convex strategy

Vote 015H: Whitelist TUSD-3CRV Convex strategy