Introduction
We propose for the Alchemix DAO to make an investment in Curvance, an Omnichain Yield Optimized Lending Protocol, in the form of $50k USDC, sourced from current DAO stable holdings to purchase CVE tokens. CVE serves as the governance token for the Curvance protocol, and is also the liquidity directing asset. Curvance plans to support Alchemix's synthetic assets as borrowable assets and our LPs as collateral with a gauge system that would allow Alchemix to direct emissions towards those lending markets. This will align our interests with another innovative DeFi protocol, and create additional utility for assets in the Alchemix ecosystem. Please read further to learn more about Curvance and decide if you believe it makes sense for the Alchemix DAO.
About Curvance
Curvance is a decentralized stablecoin lending protocol with an initial focus on Liquidity Providers (LPs) from the Curve, Convex, Aura, and Frax ecosystems. They aim to allow users to earn optimized yields while maximizing capital efficiency through peer-to-peer lending. Curvance supports assets such as cvxCRV, auraBAL, and yCRV to earn similar or potentially higher APRs than they would on their original platforms, while also offering the added ability to collateralize those assets as deposits for secure stablecoin loans. The interest rates on these loans are based on several factors, including pool APR, price volatility, token liquidity, and loan-to-value ratios.
The Curvance protocol consists of three core features:
- Decentralized Lending: A peer-to-peer lending contract allowing liquidity providers to earn yield, and collateral depositors to borrow stablecoins at fair market value rates.
- Liquidity Routing: Collateral deposits to the Curvance platform will be routed to the underlying contracts that earn them yield. For example, cvxCRV deposits would be routed to Convex Finance. This allows for users to maintain their collateral asset yield interest rates while utilizing loan services.
- Token Governance: The CVE governance token will allow for participation in DAO voting. The DAO will control various aspects of the Curvance protocol, including setting pool gauge weights, collateral eligibility, determining lending assets, and platform fee rates/distribution. Alchemix having gauge voting power on Curvance would enable the ability to direct incentives to our assets on the platform, thereby providing new utility for our users.
For more details on how Curvance works under the hood, in addition to information on CVE mechanics, token distribution, etc. please reference their documentation here: https://docs.curvance.com/cve/an-omnichain-future/the-omnichain-gauge
Alchemix and Curvance Partnership
An important aspect of this proposed investment is the planned support for Alchemix's synthetic assets by Curvance. Curvance will include Alchemix synthetic assets as borrowable assets within their protocol. This will create new ways for debtors to utilize their alAssets.
In addition, Curvance also plans to accept our LPs as collateral. This would provide our LPs with opportunities to simultaneously earn yield, and gain capital efficiency by borrowing off of their value. With a locked CVE position, Alchemix could create an additional source of yield for LP holders as well, enhancing the benefits for liquidity providers and our ecosystem's overall attractiveness.
In particular Curvance intends on supporting all of the following pools as collateral on their platform to start:
- alUSD/FRAX/USDC LP (deposited into convex not frax since there is no time lock)
- ETH/alETH LP (deposited into convex)
- WETH/ALCX LP (deposited into aura)
Should this investment be made, Alchemix could incentivize any of these markets by directing CVE emissions as the DAO sees fit.
Investment Proposal
We propose that the Alchemix DAO considers the following option to invest in Curvance: in the form of vote-locked CVE, at a cost of $0.135 per token, adding up to a $16.8 million valuation for the token’s circulating supply after one year (length of the lock up); or to pass on the opportunity.
Given the synergies of Curvance and Alchemix, the utility of locked CVE to the DAO, and the relatively low cost to the DAO, the biz dev sub DAO and Alchemix core developers believe that this investment makes sense, both as a way to increase utility of alAssets moving forward, and as a way to establish the beginning of a fruitful relationship with a new innovative DeFi protocol. As always, the DAO will have the final say. Please vote in accordance with your wishes.
Voting
Option 1: Purchase $50,000 worth of CVE tokens.
Option 2: Do not Purchase any CVE tokens.
