Hi fellow wizards, some of you might know but I am a big fan of what Convex is doing to abstract the Curve ecosystem. After seeing multiple people talk about adding cvxCRV as collateral ( mainly CoolAreCats who I talked to ), the following proposal was written.
All the details are inside and I encourage everyone to read it to fully understand the implications.
2 points stand out in the proposal that should be discussed as they can have a big impact on the the way the cauldron will work :
Should Abracadabra take a cut of the farmed CVX to build it’s own treasury for voting purposes ?
Should ( can ? need team help there ) the cauldron use the 3Crv rewards ( stablecoins ) to repay the MIM debt automatically ?
Nonetheless I believe adding cvxCRV as a collateral is a good idea for every protocol involved. This could become a widely used cauldron as the token’s yield is really good and as Convex is considered a safe platform by now.
Feel free to leave your impressions/comments/ameliorations
I especially like the self-repaying loan part of this. I feel like that would draw a large crowd and also give us another source to replenish MIM which has insanely high demand.
Is there any way we could use this fund to refill other cauldrons? Maybe if the cauldron use remains low over time we could lower the max amount of MIM allocated until it sees more borrow pressure? I think in general CRV and CvxCRV are more long term plays than a lot of the Degen offerings on the platform.
Pickle.Finance I believe solves a few complexities in this plan. I agree that acquiring a CVX position is most useful for the protocol long term. Taking a “cut” of the yield of the user with no benefit makes no sense. Also for Abra to manage the yield claims would create more complexities that these cauldrons are not currently setup to do. Self repaying would also be a new mechanism, wasn’t there a promise to Scoopy and Alchemix when this project was founded with their guidance not to do that?
Daniele has already spoken to Larry the Cucumber @ Pickle.Finance about using their Jars as collateral, and having them auto-compound. By auto-compounding these Jars a service is being provided, and Pickle takes a fee. Abra could become a lego partner, and take a “cut” of these fees instead. Let Pickle.Finance do all the complexities of claiming and auto-compounding the rewards, and the Pickle Treasury can send Abra a payment in the form of CVX. Pickle currently has 4 different jars that this could be applied to including the cvxCRV single staking, CRV/cvxCRV CVX/ETH ETH/STETH. All of these could be CVX revenue streams for Abra by partnering.
@coolHackerName I don’t think we should enable repaying other loans with this cauldron as it would go against the market segregation implemented by Kashi. Maybe we can give the choice to user to either self repay or to keep the 3CRV so he can repay another cauldron’s debt but I’m not sure how that would work code-side.
@Shizco I’m not completely against this but I’m not sure auto-compounding is the thing here. Personally I’d prefer to keep my CRVs and CVX even if Abra takes a cut ( compounding CRVs would makes sense tho ).
Also to add on the rewards, C2tP in Convex discord pointed me to a wrapping contract that they created for cvxCRV to allow for distribution ( I updated the hackmd ). This could reduce some of the complexity around rewards distribution
The idea would be to deposit the farmed 3Crv in the Curve pool, and withdraw MIMs to repay the loan, therefore making MIMs available to borrow more continuously. But that could impact MIM liquidity on the main 3Crv/MIM pool.
However if the pool is getting unbalanced, there’s an incentive to rebalance it ( LP deposit bonus of Curve ). This could be done by users by borrowing the MIMs and providing them, or by buying MIMs on the market ( UST pool for example ).
Implications of this repayment are hard to anticipate as it really depends on what the users will do with those MIMs and how the liquidity for MIMs will evolve.
Well farmed 3crv is a liquidity token so we’d need to Withdraw the liquidity in the form of MIMs. That would actually strengthen the MIM peg, which would valuable for Abra. If some folks Borrow those MIMs, and Swap them for USDC etc, that would reduce the value, but others would use those MIMs to do other things. So overall I suspect it would be a net positive for the MIM peg.
I also agree with @Clonescody re the CRV and CVX. I want to Stake those with Convex, that’s the reason I’m in 3pool. If all I wanted was to stablefarm, I’d have my 3pool liquidity over in the other Cauldron with my UST liquidity. I’m in the 3pool only to build my CRV (well really CVXCRV) and CVX positions.
Re Pickle, I have nothing against that protocol (I used them in my early days of SPELL farming) but imho auto-compounding is a Feature, not a Product and I’d rather see us build it natively than pay 20% to someone else for such a simple feature. That said, I still have no interest at all in autocompounding CRV or CVX for more 3pool.
I’m with you on the auto-compounding, Abra should either built it, or we simply let the user claim the rewards and do what he wants with them. Personally I don’t want them sold for the underlying, I’d rather flywheel them .
I am a massive advocate of adding a $cvxCRV cauldron. I know many $cvxCRV stakers are long term holders which leads me to believe it will be a safe and well utilized source of collateral.
On the point of “Abracadabra could take a cut on the CVX farmed by the cauldron to lock them and gain voting power for MIM pools as treasury” I think this would be an awesome idea in lieu of interest. Eg. the 0.5% Interest rate is first recuperated from the farmed CVX (which is used for abra voting power)
As a cvxCRV holder I would be fully aligned with this concept and support this proposal.
Love the idea for a cvxcrv cauldron. Would also love to have more curve LPs available on Abra in general. For instance why not the cvxcrv/crv cauldron?
As regards to fees i’m a big no on taking a cut of farmed rewards. Not only is that more technical and a bigger engineering lift but would be unique among all cauldrons in this way. Like all other cauldrons interest should be deposit fee in MIM and annual interest rate.
I’m curious about this, would you ( or other people ) be inclined to give a cut on the CVX ( so Abra accumulate voting power ) if the interest were 0% ?
Only the 0.5% first time borrow fee then no interest at all in exchange of 5/10% of the farmed CVX ?
To answer on the cvxCRV/CRV pool cauldron, the issue is that too much leverage could cause cvxCRV to depeg and that would be bad for everyone.
Leveraging a plain staked cvxCRV cauldron would allow Abra to tap into the CRV broader liquidity, not into the cvxCRV one.
That makes sense to me on why no crv/cvxcrv pool. And we certainly don’t want to do anything to destabalize the peg.
Personally, I would prefer my debt to be denominated in fiat rather than give up yield on assets (cvx/crv) which I expect o asymmetrically appreciate over the coming years. I believe that is the beauty of the abra platform.
I understand the desire for the protocol to accumulate CVX but for me i’d prefer the platform fees be unchanged for this cauldron. It would also be a pretty big departure on fees relative to 3pool and tricrypto which yield the same assets.
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