This is an updated version of AIP-90: https://forum.alchemix.fi/public/d/414-aip-90-deploy-alchemix-on-arbitrum/4
Proposal:
Deploy an alUSD Alchemist on Arbitrum with AAVE V3 strategies enabled for alUSD, including aUSDC, and aUSDC.e, along with pre-approval for JonesUSDC. Pre-approve the future deployment of an alETH Alchemist on Arbitrum with wstETH enabled.
Collaborate with Ramses DEX to form liquidity for alAssets, offering Alchemix substantial voting power in return for contributing TVL to Ramses DEX to help form liquid markets there.
Contribute to matching bribes from Aura to form liquidity for alETH on Arbitrum, in addition to deploying a portion of AMO funds.
In light of recent events alETH strategies and related activities should be approved now, so that plans can begin to be made, but should not be deployed/executed until the dust has settled pertaining to the recent Curve hack, and outstanding questions regarding deficit in backing are answered. The following governance post will vote to approve the deployment of alUSD strategies in the immediate future, and pre-approve alETH strategies to be introduced at a later date (at the discretion of biz-dev and the Alchemix multisig)
The alUSD Alchemist on Arbitrum should utilize the following parameters:
Accepted Collaterals:, aUSDC, aUSDC.e, and JUSDC
Max LTV: 50%
Deposit Caps: Each collateral asset will have a $1m cap (after min 1 week of 100k, at multisig discretion)
Repayment and Liquidation Caps: $500k per 60 minutes
Maximum Loss: 5bps (0.05%)
Cap Raises: All vaults are pre-authorized to have their caps increased to $5m at the discretion of the multisig.
The alETH Alchemist on Arbitrum will utilize the following parameters:
Accepted Collaterals: wstETH
Max LTV: 50%
Deposit Caps: Each collateral asset will have a 200 WETH cap (after 1 week of 50, at multisig discretion)
Repayment and Liquidation Caps: alETH = infinite
Maximum Loss: alETH = 200 bps (2%) (Max loss based on st/rETH to ETH price)
Cap Raises: This vault is pre-authorized to have it’s caps increased to 500 WETH at the discretion of the multisig.
Context:
Ethereum Layer 2 networks continue to gain in adoption, TVL, and mind share. As part of the Alchemix multi-chain vision, the team has been evaluating various Layer-2 networks as potential candidates for the next Alchemix deployment. Arbitrum has emerged as a leading candidate in this regard, as it is the largest Layer-2 network by TVL, a hub for established DeFi protocols and innovation, and presents a large surface area for potential collaborations.
Any Alchemix deployment to a new chain requires the following:
Compatible yield strategies;
Gnosis safe support;
The ability to facilitate substantial liquidity on one or more DEXs to service loans;
New Alchemist configurations, and ability to port other existing contracts such as the Transmuters and keepers; and
The ability to bridge.
Initial Vault Strategies
With the integration of AAVE and ETH liquid staking vaults on Mainnet, Alchemix now has several existing yield strategies that can be ported to Arbitrum without much difficulty. The integration of ETH vaults are straightforward and need no further explanation, however there is a unique situation pertaining to USDC where AAVE offers two separate USDC vaults: USDC, and USDC.e. The latter was the first vault added by Aave, and refers to a bridged asset representing USDC held on mainnet. The former is a new strategy approved June 17th, 2023 and refers to native USDC launched by Circle themselves.
As of the snapshot that introduced the newer USDC strategies, (https://snapshot.org/#/aave.eth/proposal/0x8c8da3842a4590f609b2781874b740808170bd8e37a3589bb6b5af8df6c9c153) the native USDC Aave vault currently accepts a lower TVL, but that will likely by prioritized over USDC.e in the future. By onboarding both vaults, users of Alchemix will have the opportunity to choose their risk preference and to prioritize the vault of their choosing, based on yield, capacity, or any other factor they may weigh.
In addition, the Alchemix core developers have begun development on an adapter for Jones DAO’s jUSDC vault to integrate an Arbitrum-specific option to earn yield. Jones DAO is a yield aggregator and vault protocol where users can enter various strategies to earn yield. The jUSDC vault is a passive strategy that allows users to lend USDC, serving as counterparties to another group of users that would like to lever up on GLP. For more information on jUSDC vaults see their documentation here: https://docs.jonesdao.io/jones-dao/features/understanding-jusdc-and-jglp
Partnership with Ramses DEX
On the liquidity side Alchemix will utilize Ramses to facilitate alAsset liquidity. Ramses is a (3, 3) DEX similar to Solidly and Velodrome. Ramses has offered to provide Alchemix with a veNFT, along with a substantial initial allocation of voting power to help get a liquidity flywheel started. For more information on Ramses see their documentation here: https://docs.ramses.exchange/introduction-to-ramses/what-is-ramses. As part of this collaboration, Alchemix will move some of its existing protocol-owned-liquidity to Arbitrum to seed Ramses pools for alUSD and alETH liquidity. (at the discretion of the Bizgov and operational teams) As of AIP-95A (https://snapshot.org/#/alchemixstakers.eth/proposal/0x86db192239099fe50745aadbca168de3e2db0e936c13d06ab49355227e522d07, https://discord.com/channels/738480789464940634/739463132384067614/1144710716620812330) $360k of POL has been moved and deposited in Ramses. Additionally, Alchemix will use $1k a week in the form of ALCX tokens for bribes to facilitate liquidity provisioning from external liquidity providers. This collaboration will benefit both parties by increasing liquidity and fostering a mutually beneficial relationship. Alchemix will have a long-term goal of accumulating Ramses voting power.
Further Collaboration With Aura
Aura has recently deployed on Arbitrum, and there now exists an alETH/stETH Balancer pool on Arbitrum. Starting August 10th Aura has agreed to match any bribes we make using ARB. In order to take advantage of this deal and reduce the cost of liquidity incentives by 50%, this proposal advocates that the DAO, at the discretion of the multisig once alETH is in a healthy enough state, spends up to $1k per week on bribes towards this pool and migrates up to $500k ETH worth of protocol-owned and/or AMO liquidity. The termination of these bribes and/or the withdrawal of this liquidity is also at the discretion of the multisig.
Alchemists + Other contracts
The Alchemist parameters follow the precedents set by previous parameters for the mainnet LSD vaults, and the AAVE Mainnet launch. Deposit caps are significant but smaller than on Mainnet, with an initial “soft launch” period. Liquidation caps are also kept smaller, as the amount of arbitrage possible in the event of an underlying token de-peg is a function of all liquidation caps combined. Other necessary contracts will be ported and deployed as is determined to be appropriate by the operational team. As mentioned above, all operational steps pertaining to alETH will be pre-approved but executed at the discretion of biz-dev and the Alchemix core dev team. The current intention is to proceed with a full launch of alUSD, and all alUSD related partnerships, whereas alETH operations will be executed slowly as the dust settles and more information is made available as to the current state of alETH and it’s backing as a result of Curve’s compensation to LPs and the way that the DAO votes to handle distribution of hacker-returned funds in a future AIP.
Voting
A vote “FOR” authorizes Alchemix to launch alUSD and alETH Alchemists on Arbitrum with AAVE V3 USDC and USDC.e strategies and Jones DAO jUSDC vault integrated for the alUSD Alchemist, and AAVE v3 WETH, wstETH, rETH, and sfrxETH vaults integrated for the alETH Alchemist, utilizing the listed parameters AND authorizes Alchemix to collaborate with Ramses and Aura DEX to increase liquidity and voting power.
A vote “AGAINST” does not authorize Alchemix to launch on Arbitrum with the above parameters and partnership with Ramses DEX.
