Summary
This post proposes preparing two contingency actions that allow the DAO to respond quickly if crvUSD experiences severe peg instability.
These actions are not intended to be used under normal market conditions. They simply allow the DAO to react faster if urgent stabilization becomes necessary.
The proposed actions are:
- Grant approval for the Curve Emergency DAO (eDAO) to transfer up to 400,000 crvUSD from the DAO treasury (0x6508eF65b0Bd57eaBD0f1D52685A70433B2d290B) if emergency incentives or liquidity support are required.
- Deploy and set an owner proxy for CurveTwocryptoFactory (0x98EE851a00abeE0d95D08cF4CA2BdCE32aeaAF7F) that allows the eDAO to adjust pool parameters (including swap fees) during emergency scenarios.
The goal is to reduce governance latency and allow controlled, reversible emergency responses if peg conditions deteriorate rapidly.
Abstract
This proposal prepares two operational tools that improve Curve’s ability to respond to extreme crvUSD market stress.
Treasury Emergency Liquidity Authorization
The DAO treasury would approve the eDAO to transfer up to 400,000 crvUSD. This does not move funds immediately and does not commit to spending treasury reserves. It simply allows rapid deployment of stabilization incentives without waiting for governance timelocks.
This authorization could be used to:
- increase scrvUSD incentives
- deploy liquidity incentives to PegKeeper pools
- support other emergency demand sinks approved by eDAO signers
Expected outcomes:
- faster demand support during stress
- reduced time between identifying instability and deploying mitigation incentives
- improved market confidence through visible readiness
YieldBasis Pool Emergency Parameter Control
This proposal introduces an owner proxy contract for YieldBasis AMM pools that allows eDAO to modify certain pool parameters if necessary.
Most importantly, this enables:
- emergency swap fee increases (soft trading pause)
- parameter adjustments designed to slow destabilizing flows
- controlled, reversible intervention without requiring a full DAO vote during crises
Expected outcomes:
- ability to contain volatility-driven feedback loops
- additional protection during extreme imbalance scenarios
- improved coordination between Curve and external leverage liquidity environments
Motivation
Recent crvUSD peg volatility demonstrated that stabilization mechanisms can function correctly but still be limited by response speed.
During stress periods:
- crvUSD demand can decline quickly due to deleveraging
- PegKeeper reserves may temporarily decline
- mint market borrow rates skyrocket, squeezing borrowers
- governance delays can reduce effectiveness of mitigation actions
Curve governance intentionally prioritizes safety and deliberation, but emergency situations require the ability to deploy tools quickly.
This proposal addresses two specific bottlenecks:
1. Treasury Access Latency
Emergency incentive deployment currently requires full governance cycles. Allowing limited pre-authorization gives the DAO flexibility to react quickly while maintaining strict spending caps.
2. AMM Control Latency
YieldBasis pools can become a major transmission channel for volatility. Having emergency parameter control allows Curve to slow destabilizing flows if necessary without permanently altering pool functionality.
Why Use eDAO
The eDAO already exists as Curve’s emergency operational layer. Restricting these powers to eDAO:
- maintains multi-sig oversight
- limits authority to emergency-only signers
- avoids introducing new governance trust assumptions
- allows faster response while maintaining accountability
Why Set a Spending Cap
The 400,000 crvUSD limit:
- prevents unrestricted treasury exposure
- allows meaningful but bounded emergency stabilization capacity
- can be revised or revoked by governance at any time
Execution Intent
These powers are intended to be used only if crvUSD faces severe instability such as:
- sustained peg deviation beyond normal volatility
- worsening PegKeeper reserve depletion
- disorderly liquidity or arbitrage conditions
- rapid deleveraging cascades
If market conditions normalize, these controls would remain unused.
Specification
Action 1 — Treasury Approval to eDAO
Grant approval allowing eDAO to transfer up to 400,000 crvUSD from DAO treasury.
Contract Call
Function: setTokenApproval(address,address,uint256)
Token: crvUSD
Spender: Curve Emergency DAO (eDAO) 0x467947EE34aF926cF1DCac093870f613C96B1E0c
Amount: 400_000e18
No funds are transferred during this action. The approval simply allows eDAO to deploy funds if emergency stabilization is required.
Action 2 — Deploy and Assign YieldBasis Pool Owner Proxy
Step A — Deploy Owner Proxy
Swiss Stake will soon deploy a proxy contract that:
- holds administrative permissions over YB AMM pools
- allows eDAO to call parameter modification functions
- restricts authority exclusively to eDAO
Step B — Transfer Pool Ownership
Function: commit_transfer_ownership(address)
admin: CurveTwocryptoFactory OwnerProxy (to be deployed)