AIP - 24: Acquire EUROC to set up an agEUR-EUROC Curve pool

Hey everyone,

This is a proposal to setup an agEUR-EUROC Curve pool on mainnet using algorithmic market operations and the protocol surplus.


EUROC is a centralized stablecoin issued by Circle, the same company that is issuing USDC.
While the fact that it is centralized bares some regulatory risk, it is still an important asset that can be used to efficiently achieve peg for agEUR as discussed in this governance discussion.

EUROC liquidity grew quite a lot over the past few weeks thanks to some gauges it got on Curve. agEUR is now involved in one of these gauges with EUROC and cEUR.
While this gauge will help increase agEUR liquidity, it involves three different tokens meaning that 1$ of incentive placed on this gauge will result in 0.33$ going to agEUR holders. On top of that, cEUR is a bridged token which relies on a protocol with endogenous collateral making it a risky asset to be paired with.

It makes sense to spend time and efforts on an agEUR-EUROC pool on Curve to achieve the goals of maintaining agEUR (and EUROC peg) while still getting the protocol to control a significant share of the pool.

How would the protocol end up controlling a portion of the pool’s liquidity?

Well the protocol is able to mint technically unbacked agEUR in the market through Algorithmic market operations or AMOs. It also has a surplus >$7m, and as such it can mint agEUR and pair it with EUROC acquired from the protocol surplus.

Once this initial liquidity seeded, the protocol could then mint agEUR into the pool as soon as it’s imbalanced (more EUROC than agEUR).


We have deployed this agEUR-EUROC Curve pool and gauge (a-factor = 1000).

The proposal is to mint 200k agEUR in the pool and use USDC from the protocol surplus to acquire 200k EUROC, deposit this liquidity on Curve and stake it in the gauge.

Liquidity on EUROC is quite thin and 200k is the maximum that can be afforded without incurring too big slippage.


The minted agEUR would be from AMOs, and the USDC from the protocol surplus would be swapped to EUROC using 1Inch.

The agEUR minted from AMOs would in this case go in the open market when there are swaps from EUROC to agEUR. In this case, they would be backed 1:1 by the EUROC used for the swap. It’s in some way equivalent for the protocol to rely on a price stability module to mint agEUR but built on Curve.

The governance multisig on Ethereum mainnet would take care of all the operations.

Value to the protocol

This operation to seed liquidity in the pool should help the pool get a gauge that accumulates CRV tokens on Curve.
The protocol would then make a revenue not only from transaction fees but also from the CRV inflation going to the pool.

Having AMOs minting agEUR in the pool as soon as it’s imbalanced could help the protocol create flywheel effects (à la FRAX) on Curve where a big share of the CRV inflation is going to the protocol, which helps to grow the agEUR liquidity and peg quality.

We could then imagine if it works well this pool becoming a base pool with which new Euro stablecoins launching themselves should pair themselves.

Also it’s going to help the protocol reduce its exposure to the USD/EUR change risk when it is not sufficiently hedged by HAs.


This proposal would reduce the surplus immediately available to the protocol. In case of a black swan event, it may create some delay to pull the funds back to the Core module.

It would also create some dependency on the agEUR backing on EUROC: if EUROC came to fail (for some regulatory reason for instance), while USDC still works then this proposal would have put the protocol at risk.

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This sounds like a great first step in making agEUR the dominant decentralized EURO stablecoin. Once the pool gets going, that would probably be a good time to acquire some CRV using the protocol reserves to help direct CRV emissions to the pool.

Regarding the risk to the protocol, we should probably limit the amount of the AMO minting to less than the protocol reserves to keep agEUR solvent in the case of a black swan. I’m curious what your thoughts are on how to mitigate that risk.

Yes I haven’t thought yet about how to exactly decide on a cap of the AMO minting. FRAX has like 70% of their supply in this AMO so they couldn’t resist a black swan event. Does not meant that we must do like them but good point of comparison.

A black swan event for me would happen if Circle censors the Curve pool (it wouldn’t be an Angle contract that ends up owning the EUROC). This is the strategy adopted by Maker to some extent but by getting to know the Circle team personally (which we do), we’re making such distress situations easier to handle, and it’s good to have open and transparent communication channels with them.

Other risk is that EUROC completely fails. This would be due to a regulatory risk (like EU full censorship of Circle and seizing the bank accounts), now we can hope that enough people would be involved for the EU to be reluctant to act because of the amount of concerned retail users.

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