Hey everyone
This is a proposal to launch an algorithmic market operation (AMO) on the agEUR-EUROC pool that can automatically mint agEUR on the pool and stake the obtained LP tokens to accumulate CRV and CVX rewards.
Context
Thanks to the successful vote on Curve, the agEUR-EUROC pool on Curve now has a gauge that can receive CRV and CVX rewards. Following this governance discussion, the protocol has also minted agEUR and taken a portion of the protocol’s surplus to seed the pool with liquidity.
On Curve, contrarily to Uniswap, when bringing liquidity, you do not necessarily need to bring an equal amount of both tokens. If a pool is imbalanced for instance, like there are more EUROC than agEUR in the pool (because someone swapped EUROC to agEUR), someone bringing only agEUR liquidity may get a small bonus for providing this liquidity.
Conversely, if a pool is imbalanced and you’re withdrawing the token which is overrepresented in the pool, you can also get a bonus for doing so.
Proposal
The proposal is to launch an AMO which can mint agEUR in the agEUR-EUROC pool when there are more EUROC than agEUR and which can withdraw agEUR when there are more agEUR than EUROC in the pool.
Implementation
Contrarily to the other AMOs of the protocol, this would be done via permissionless smart contracts which can mint agEUR directly in the pool or withdraw and burn excess agEUR from the pool.
It would enable us to start using the AMO infrastructure we have been building since the month of May of this year.
Value to the protocol
FRAX is well known for having had this kind of AMO, and it is what enabled them to get the flywheel moving and accumulate a lot of CRV and CVX voting power.
Goal is for Angle is similar: it is to start owning the liquidity of the agEUR-EUROC pool, and to start accumulating CRV and CVX rewards which will help us grow the pool even bigger.
With the vote that passed to switch the Curve rewards to this new pool, the pool should soon start accumulating rewards.
Note that having an AMO that works efficiently like that makes this pool the perfect equivalent of a price stability module but built on Curve and on which 0.02% of the transaction fees are going to veCRV holders.
Risks
The risk here is mostly the smart contract risk: the one on Curve and the one on Angle.
Having an AMO that mints agEUR into the pool also takes yield opportunities for other agEUR holders. Idea though is that value taken by the protocol through its AMOs will be redistributed at some point.