• AIP

  • AIP-44 - Seed alUSD/BEAN Curve pool

TL;DR

  • Use $250k in alUSD to help seed an alUSD/BEAN pool. Beanstalk will seed $250k in BEAN to establish a new Curve pool.

  • The alUSD will be taken single-sided from the existing alUSD-3CRV pool through the new AMO functionality (AIP-39) or through our POL.

  • After seeding the pool, Alchemix and Beanstalk will jointly put up a Beanstalk governance proposal to add the alUSD/BEAN pool to their Silo system - this way users can earn Stalks and Seeds as with the existing Silo pools.

  • Alchemix will not have to put up additional incentives for this pool and the $250k alUSD seed can be removed after the pool has reached sufficient liquidity (>$10m TVL).

Beanstalk
Beanstalk is a credit-based algorithmic stablecoin. It was introduced as a solution to both centralized stablecoins and avoiding collateral requirements for minting new stablecoins. For a longer introduction and an explanation of the tokenomics and stability mechanism please have a look at the docs here.

The Bean Sprout (a Beanstalk accelerator) team have reached out to Alchemix to set up a new alUSD/BEAN Curve pool. Currently, BEAN has existing pools vs. 3CRV and ETH, with more new pools being introduced - LUSD/BEAN being the first of those.

For Beanstalk, the creation of this new liquidity pool will help with peg stability, utility and to deepen their liquidity. For Alchemix and its users, this new pool would create a supply sink and novel use case for alUSD and offer high yields to liquidity providers. Existing BEAN pools often have an APY >30% with peaks to triple-digit yield opportunities.

Please note that users wanting to LP this new pool will have to make a risk assessment for themselves, this AIP is not financial advice nor an endorsement. However, for the Alchemix protocol in general the creation of this new pool would be relatively low risk - it could lead to additional arbing opportunities but even in an event in which BEAN depegs, the AMO, the transmuter and our main liquidity pools (vs. 3CRV, D3, D4) will be able to ensure peg stability for alUSD.

Proposal
We propose that Alchemix & Beanstalk seed this new Curve pool together, each party providing $250k in their stablecoins to create a new $500k Curve pool. Following the creation of that new pool, a BIP will be proposed to add LP Tokens for the alUSD/BEAN pool to the Beanstalk Silo, which if passed will lead to incentives - in the form of Stalks and Seeds - for liquidity providers.

The $250k in alUSD will be taken from the existing alUSD-3CRV pool through the AMO mechanism (as described in AIP-39). This pool is currently overweight in alUSD so it provides a natural opportunity for the seeding of a new pool. If the AMO is not ready to withdraw alUSD, we will take alUSD from POL and reimburse from the AMO later.

In case the BIP fails to pass, Alchemix will withdraw the $250k from the pool. Also, if the BIP passes and the pool TVL grows through user deposits, Alchemix will withdraw the $250k in alUSD (which will then enter the normal AMO flow). The exact moment this will happen will be left at the discretion of the core team, but it should not occur before the pool reaches $10m in TVL.

Vote

  • In favour, seed an alUSD/BEAN pool

  • Against, don’t seed this new pool

Nice proposal!

The AMO also has timelocks for any withdrawals of alusd, alusd3crv, and all collaterals, whereas the POL is behind a multisig only, allowing for much more timely operations. Furthermore, how we use the withdrawn alusd or aleth in the AMO still needs to be formalized in the DAO before such operations are performed. So considering the protocol controls ~ 7m alUSD3CRV at the moment outside of the AMO, it would make sense to draw from that instead of the AMO.

While I have no strong feelings on Beanstalk myself, the additional use-case for alUSD is great and risks are relatively minimal

Using POL is another avenue of reinforcing alUSD's peg so I'm agreed there too. As we go forward proliferating alAssets, as safely as possible, broadly into DeFi is going to be a major avenue of growth acceleration for Alchemix.

Will be voting yes.

Additional use case and growing network are positives.

I'm not sure fragmenting alUSD liquidity into another pool makes a ton of sense. What/when is the exit strategy if the pool never reaches $10m tvl?

    thetechnocratic To me it's not really about creating a new liquidity pool but about creating a novel use case for alUSD and attracting new users to the platform (a large % of people in this pool will likely be existing Beanstalk users). I'm not too worried about fragmented liquidity since the pool size will remain small compared to existing pools and I don't think current LPers on Curve/Convex would migrate to this new pool, i.e. I think we can assume that this pool would attract new TVL rather than shifting current TVL around.

    If the pool doesn't reach $10m TVL then the seed will remain indefinitely or until governance decides otherwise. In the meantime though, the funds would not be sitting idly because we have the option to stake the LP tokens on Beanstalk ourselves.

      “Alchemix will not have to put up additional incentives for this pool and the $250k alUSD seed can be removed after the pool has reached sufficient liquidity (>$10m TVL)”
      For me this is the main de-risker. The risk mostly opportunity cost, which for alUSD seems like a good trade.

      Does the fact that Bean has been well above it's peg over the last few days concern you?

      In the last hour it has become clear that there has been a flashloan exploit of Beanstalk. While the AIP-44 proposal is already live on Snapshot we obviously will have to wait and see the details and impact of what's currently happening and re-evaluate after that.

        0xFelix Agreed. I'll cancel the proposal for now and mention it in governance proposals and edit the governance channel post.

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