Curve part of turning WETH/crvUSD YieldBasis pool into a "permissionless propAMM"

Proposals
1

Based in the research, the regime in which YB pools operated is proposed to be changed.

While YB pools are making more than releverage costs on average, earnings are equal or less than expenses when volatility of the market is small (now). We’d rather want these pool to have net earnings in all market conditions.

Most important component of this is bringing precise external price information on chain. We will do it using a Pyth price stream. Informed pool is able to offer much smaller spreads and be much more efficient.

In addition, when well informed, our spreads can vary depending on how far the fair price is from the pool’s internal price. This allows to get a much larger fraction of the mispricing to go back as a pool revenue rather than being harvested by the arbitrage trader.

The proposal sets policy contract 0xAEa95d551154443E73565bE724d59D63d72f8A7d for Curve pool 0x656341Ef90b622c6634e0573772FfB7f3669b9f3 to implement it. Votes on both Curve and Yield Basis are needed for the parameters to be in full effect.

Change in Yield Basis returns would look like on the following picture:

recent-value
recent-value1200×675 88.2 KB

In addition, volumes for stableswap crvUSD exchanges due to Yield Basis arbitrage should increase by about factor of 3 when a similar policy is implemented for every pool.

Parameters to set

  • Attach YBOraclizedPolicy 0xAEa95d551154443E73565bE724d59D63d72f8A7d to the YieldBasis crvUSD/WETH pool 0x656341Ef90b622c6634e0573772FfB7f3669b9f3;
  • Set pools reserved profit fraction to 42.2%;
  • The policy prices swaps off signed Pyth Pro ETH/USD reports: swaps toward a fresh report that do not cross it pay between 50 bp and 175 bp (50 bp plus 67.5% of the reported edge above 50 bp), with the discount fading over 5 minutes; other operations pay 175 bp.
  • price_scale follows 80/160-minute trend-gated averages of the reports (after 90 minutes without one, of the pool’s price after the previous trade, as the pool’s own oracle does), by at most 50 bp per block.
  • New LT deposits must add debt proportional to their minted LP collateral within 1 bp - this protects against value drain attack via deposit+withdraw.
  • YieldBasis DAO owns the policy.
  • Curve emergency DAO can kill it.
  • LevAMM fee and donation rate follow in a separate YieldBasis vote.
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