Disclaimer – I am a member of the TFL team.
UST liquidity cross chain continues to grow, especially on Ethereum. At the time of writing this the UST-3CRV pool sits at $430m and the Shuttle UST - MIM pool sits at $970m thanks to these two proposals. The UST-FRAX pool will be receiving a gauge soon adding further UST liquidity and bolstering the Terra ecosystem’s relationship with the Frax team. Alpha leak: FRAX will be adding UST as a collateral option in the near future.
UST FRAX MIM
Now that liquidity exists, it is time to bring awesome UST use-cases to Ethereum DeFi through a couple of initial integrations, along with special additions to Solana and Polygon.
Olympus DAO (Ethereum, Solana, Polygon)
Olympus, a decentralized reserve currency protocol based on the OHM token, is the pioneer of DeFi 2.0 and original rebasooooor (Ampl obvs doesn’t count). The founders of Protocol Owned Liquidity, allowing dApps to own instead of rent liquidity, has begun its interchain expansion through project Proteus along with Olympus Pro - bonds as a service to help any protocol own its liquidity. OHM has a Market Cap of $2.4B and treasury of $700m, one of the largest protocol treasuries in DeFi by far.
Olympus will be bringing OlympusPro to Terra protocols soon along with gOHM liquidity on Astroport.
This proposal asks the Terra community to partner with Olympus DAO in a few kick ass ways:
- Enable UST bonds on Ethereum OlympusDAO, this proposal has already passed on OlympusDAO’s own governance and will be timed with the release of gOHM on Terra
- Olympus plans to make 3.3% to 5% of their RFV UST which means 7 to 10m of UST will be sucked into their treasury and never sold.
- Bond $1m UST with Olympus and 3,3 the OHM forever
- $255k in Luna incentives over 3 months for the gOHM-UST pair on Terra. Olympus will be incentivizing this pair with 0.4 gOHM per day, at current price of ~$18,500 that’s roughly $666k over 3 months. Additionally, there will be ASTRO rewards on this pool too.
- $85k in Luna incentives over 3 months for the gOHM-UST pair on Solana, this will be the only incentivized gOHM-stable pair on Solana. Olympus will be incentivizing this pair with 0.08 gOHM per day, roughly $133k over 3 months.
- $85k in Luna incentives over 3 months for the gOHM-UST pair on Polygon, this will be the only incentivized gOHM-stable pair on Polygon. Olympus will be incentivizing this pair with 0.08 gOHM per day, roughly $133k over 3 months.
Total funds: 1.425m UST
Transparency plan: Follow up posts in the Agora thread including when UST bonds are live, 1m bond transaction, bi-weekly updates on UST in the OlympusDAO treasury for two months, all three pair addresses when they exist and where you can join the farm.
Rari Fuse (Ethereum)
Rari Fuse is a platform that allows permissionless creation of lending and borrowing pools with any collateral assets, to date it has over $1.2B in assets lended.
The largest pool currently is Fuse Pool 6, Tetranode’s Locker, with over $535M supplied and $135M borrowed. Floating interest rates for lending and borrowing are based on demand, currently in Pool 6 FEI, DAI, MIM, USDC, and FRAX all have a lending APY of roughly 20% due to the insane borrow demand from users wanting to borrow against their gOHM. As an example there’s $46.3m DAI lent and $33.2m borrowed in this pool, $88m USDC lent and $58m borrowed, $31m FRAX lent and $24m borrowed.
UST could benefit from being introduced into a couple of the most popular pools on Fuse for a few reasons. First, it creates an additional use case and new source of liquidity for UST on Ethereum, allowing people to borrow UST against any of their assets including gOHM, stETH, and LDO to then use within DeFi. Secondly, it creates an alternate way for UST depositors to earn interest on lending. UST can quickly gain utilization within these pools if a large amount is supplied and it becomes the cheapest stable to borrow - currently the cheapest is DAI at 31% APY. Borrow demand leads to lending demand, leading to more deposits which cycles to create a cyclic blackhole for UST.
The Terra community pool should lend up to $20m in UST between Fuse pools 6, 18, and 7, beginning with $5m in pool 6, $2.5m in 18 and 7, and $2.5m top ups into these pools as needed based on utilization. The top ups instead can be used to fund additional pools, help discuss in the forum here on what strategy you’d like to see. After this initial seeding organic demand should exist to suck more UST into Fuse. This position will be revisited in six months, or earlier if the community requests, to keep or withdraw the funds and yield generated.
In the future, new Fuse pools and assets can be considered, one can imagine the value of aUST as a collateral option or even an entire Terra based asset pool.
Total funds: 20m UST to seed pools for six months, after which funds can be left or returned to the community pool.
Transparency plan: Follow up posts in the Agora thread when funds are deposited into pools, along with monthly updates on UST utilization ratios and yields generated.
Sol Invictus is the decentralized reserve currency built on Solana that aims to be more than just an Olympus fork. Invictus has done a great job putting their treasury to work, they have a market cap of $120m and treasury of $70m.
To date the Invictus treasury owns nearly $50m in USDC/USDT. Invictus, with support from Terra and Frax, plans to introduce UST, UST-IN LP, and FRAX bonds to slowly replace and overtake the USDC/USDT in their treasury. This creates another black hole for UST from which it will never be sold. To show support this proposal asks the Terra community pool to bond $250k in UST, and Frax Finance will be doing the same.
Total funds: 250k UST
Transparency plan: Follow up posts in the Agora thread when bond transaction is done and bi-weekly updates on UST in the Invictus treasury for two months.
plz pay special attention to pretty owls below:
Votium incentives have been going extremely well and continue to be net positive due to the arbitrage that exists from $emissions > $incentives. The 250m deposited from the community pool, along with $2m in incentives, have farmed nearly $4m in CVX which is used to direct additional rewards to the UST-3CRV pool.
To date over 80% of all CVX has been emitted and the #CRV owned by a single CVX continues to grow. In the last Votium round Frax provided 7.5m in FXS incentives for FRAX-3CRV and Abracadabra did 3.1m in SPELL incentives for MIM-3CRV. The Terra community should capitalize on the effectiveness of bribes right now and take this chance to farm as much CVX as we can - this is an important long term strategy as the CVX earned now can forever be used to direct rewards to the UST-3CRV pool.
The Terra community pool should enact a few changes to its 6 month curve war strategy:
- Add $1m in additional Luna incentives on UST-3CRV, considering that the Terra community owns 60% of the pool (250m/430m), the Terra community funds will earn more than that back in CVX/CRV and continue to grow our liquidity at the same time.
- Move current MIM-UST incentives to the UST-3CRV pool. The Degenbox, while great for consumers has put Anchor’s yield reserve in a tricky situation, while Anchor figures out long term sustainability there is no need to additionally incentivize the MIM-UST pool which already has 970m in liquidity.
- Increase FRAX-UST incentives by $0.5m, with matching FXS from Frax. This pool helps grow UST MC and create liquidity with an important stable on Ethereum while paying half the incentives. Net positive. Frax is the largest protocol owner of CVX and the founder Sam commented on the last proposal:
“Decentralized stablecoin pegs are stronger together than competing zero sum games where one has to lose… We’re happy to channel this CVX power to the new UST-FRAX Curve pool together so it benefits both of our projects rather than subsidizing USDT, USDC, and DAI which get free passes on Curve’s 3CRV metapools.”
- Enact a CurveDAO vote to ramp the Amplification parameter on the UST-3CRV pool to 500. The higher the A the more the pool treats each side as 1:1 even when imbalanced, an A of 0 has the pool behave like a standard xyk Uniswap pool. For context these are current A values: UST-3CRV = 100, MIM-3CRV = 2000, FRAX-3CRV = 500, MIM-UST = 1000.
Of course as the markets change over the next few months the Terra community will continue to revisit its Convex/Curve strategy to increase or decrease incentives when necessary.
Total funds: 18m UST, 6 months * 2 gauge votes per month * 1.5m = 18m
Transparency plan: Continued bi-weekly updates in the original Convex Incentive Agora like this.
Tokemak recently expanded the set of base Pair Reactors from just ETH ($309m in deposits) and USDC ($214m in deposits) to include UST, FRAX, FEI, LUSD, and DAI. This means users who deposit UST into the Pair Reactor earn TOKE rewards and TOKE voters on this Pair Reactor balance and determine the depth of reserve of those Pair Reactor assets, in addition to acting as Reactor collateralization. Liquidity Directors who vote for Pair Reactors on Tokemak direct liquidity throughout DeFi by combining assets in Pair Reactors with those in Token Reactors. To learn more about Tokemak check out this video by The Defiant.
Tokemak creates sustainable liquidity for DeFi protocols by helping to deploy liquidity into capital efficient markets through DeFi against multiple assets. This removes the need to provide direct liquidity incentives to specific pairs since TOKE is emitted to depositors. Tokemak specializes in getting widespread liquidity which complements liquidity depth found in Curve.
The Terra Community Pool should deposit $50m UST (or more if the community suggests so in the comments) for six months into the UST Pair Reactor, following the smart footsteps of FRAX who will be depositing $100m. These funds can be withdrawn at any time if the community wishes or the deposit can be extended as we revisit the position. The deposit will be earning TOKE which the Terra Community can use in the future to help vote in a LUNA Token Reactor during the next C.o.R.E. vote - adding a TOKE farm for LUNA holders on Ethereum - along with directing TOKE rewards to UST deposits. Further the TOKE earned can definitely be utilized to command a depth of deposits for UST’s Pair Reactor (i.e. the more TOKE staked to the UST Pair Reactor, the higher the APR on the UST side of the Pair Reactor, thus incentivizing more people to deposit UST and bolstering the depth of UST’s presence in the system). Finally, having a reserve of TOKE allows the Terra Community to utilize the TOKE as an LD on the Token Reactors to help strengthen or create new pairs for whatever asset - aka the TOKE can be used to vote for there to be an ALCX/UST pair as an example.
Total funds: 50m UST for 6 months, after which funds can be left or returned to the community pool.
Transparency plan: Follow up posts in Agora when the deposit is made along with monthly updates on liquidity direction and TOKE farmed.
EDIT 1: The community has suggested raising UST deposited in Tokemak to $100m
As always, UST withdrawn from the community pool will swap to Luna before each gauge vote using Terraswap / Astroport as to not dilute Luna supply.
All funds withdrawn from the Community Pool will be kept in the following Terra multisig wallet:
The multisig wallet on Ethereum is:
If you’re interested in the individual wallet addresses that control the multisig you can find them by looking at the multisig’s address on Terra Finder.
Transparency plans for each proposal have been listed to keep the community aware of fund allocation.
- OlympusDAO: Enable UST Bonds, bond $1m UST, 425k UST swapped to LUNA via Astroport over 3 months for gOHM-UST incentives on Terra, Solana, Polygon
- Rari Fuse: 20m UST to seed fuse pools for 6 months to kickstart UST borrowing
- InvictusDAO: Enable UST Bonds, bond $250k UST
- Convex: $18m UST swapped to LUNA via Astroport over 6 months for increased Votium incentives
- Tokemak: $50m UST deposited for 6 months to get widespread liquidity and farm TOKE
Total funds: 89.675m UST
Total funds after EDIT 1 (as requested by the community): 139.675m UST