Introduction:
Bent Finance (https://app.bentfinance.com/) is a farming protocol that aims to influence CVX voting power. Bent to CVX is similar to what CVX is to CRV. Currently, bent controls about 500k CVX (https://daocvx.com/leaderboard/), and BENT is about half the cost of CVX for the same amount of vlCVX voting power. The purpose of this proposal is for the DAO to determine if Alchemix should deposit a portion of its protocol-owned alETH and alUSD liquidity to start earning BENT rewards.
Bent Tokenomics
Users deposit LP tokens into BENT. Bent deposits the LP tokens into CVX. The user earns CVX tokens as normal, and BENT takes a 17% cut (similar to CVX taking a 17% cut of curve deposits). 10% goes to CVX stakers, 6% to BENT stakers, and 1% to the harvester. To make up for the 17% cut, the depositor earns BENT tokens - initially 10 BENT per 1 CVX earned, decreasing for every 100k BENT minted. BENT accumulates CVX largely from users that lock CVX for bentCVX. Again, this is all very similar to what CVX does with CRV. See here for more information: https://docs.bentfinance.com/general-information/how-to-bent
BENT tokens can be staked for weBENT. weBENT has governance power over the vlCVX that BENT controls (500k). Convex opens their snapshot bi-weekly, bent opens a similar one. weBENT stakers vote on the pools they want to boost. BENT votes on behalf of the voting split using the 500k CVX. BENT currently has alUSD pools integrated and can integrate alETH in a few days if desired.
Example snapshot
Example Vote (bentvote.eth)
Note that in the vote 376k bent tokens participated but controlled 417k vlCVX voting power. At time of vote that means $1.8m influenced $9m of CVX voting power. weBENT stakers also receive votium income for anything they vote for that has bribes.
Alchemix Options
Alchemix could do any combination of four strategies to create a position in BENT and use it to amplify our CVX voting:
- Purchase BENT on open market, stake it, vote for alUSD and alETH and get more CVX power than buying CVX directly.
- Deposit a portion of alETH and alUSD LP positions on BENT to earn CVX and BENT. Stake the BENT for weBENT then vote for alUSD and alETH. This only applies to the owned positions accumulated from ETH and DAI bonding (does not apply to AMO-owned POL).
- Lock some DAO-owned CVX for bentCVX and earn CVX and BENT.
- In the future, we could stake AMO-owned LP tokens in BENT for CVX and BENT.
Drawbacks
One drawback of bent is it adds yet another layer on top of the curve ecosystem, which can add complexity and additional points of failure. Ie, if we accumulate BENT and BENT fails, then we don’t have CVX. Additionally, BENT was exploited at the end of 2021, see here, here, and here.
Biz-Dev/Governance SubDAO Recommendation
The subDAO has discussed BENT internally. We feel that it is worth considering taking a position in BENT due to the potential efficiencies it offers over straight CVX. That being said, they have had opsec issues in the past, and we are hesitant to part with any of our hard-earned CVX given it is so important for alAsset liquidity. Therefore, we don’t think it’s advisable to purchase BENT or lock DAO-owned CVX to earn BENT. We also do not think AMO liquidity should be risked in BENT given it’s relatively new and a loss of AMO funds could result in an undercollateralized alUSD or alETH.
The subDAO feels option 2 is the only option worth exploring, as it has the safest risk/return tradeoff and minimizes the impact on our CVX accumulation operations. Liquidity can always be pulled, but with the other strategies this wouldn’t be possible (due to AMO complexities or locked tokens).The current TVL of BENT is only 42m as well, so the Alchemix position would still be sizable if the strategy is executed. Note the current value of the POL for alUSD and alETH can be seen here: https://pro.olympusdao.finance/#/partners/Alchemix
Voting is multiple choice. The proposed options are:
Option 1. Stake ½ of currently owned Protocol Owned alETH and alUSD liquidity in BENT
Option 2. Stake ¼ of currently owned Protocol Owned alETH and alUSD liquidity in BENT
Option 3. Do Nothing