AIP - 47 ... 52 Angle Gold stablecoin deployment plan


This is a set of different AIPs concerning the deployment of Angle Gold stablecoin following this vote about the intent with which the stablecoin should be made.
The sub proposals are the following:

  • AIP - 47: Launch agGOLD with ETH, USDC and wstETH as collateral assets
  • AIP - 48: Seed an agGOLD - PAXG Curve pool using 100k USDC from the protocol surplus and $100k worth of agGOLD minted by governance
  • AIP - 49: Launch a Curve direct deposit module on the agGOLD - PAXG pool that mints agGOLD whenever there are more PAXG than agGOLD in the pool
  • AIP - 50: Seed an agGOLD - agEUR Uniswap V3 pool (0.3%) using 50k agEUR minted from the protocol’s algorithmic market operations and 50k€ worth of agGOLD minted from the protocol’s algorithmic market operations as well
  • AIP - 51: Launch a gauge for the agGOLD-agEUR Uniswap V3 pool that can receive a part of the ANGLE inflation
  • AIP - 52: Add support for agGOLD free flash-loans


It was recently voted to launch an Angle stablecoin pegged to one unit of gold using the same borrowing module infrastructure as what there is for agEUR. Now that this deployment has been voted, it’s time to agree on the exact launch implementation details for agGOLD, with namely the parameters for the first collateral assets to be used.

While launching agGOLD in itself could work and lead to some demand, it may be worth taking advantage of the protocol’s surplus and safety buffer to facilitate the deployment and launch of agGOLD. Over its existence, Angle has accumulated a surplus of $8m from transaction fees, interest and other direct deposit modules. This figure of $8m accounts for what can be seen in the analytics and the surplus investments made up by the governance since the protocol’s launch.

On top of the Borrowing module, the infrastructure developed by the Angle protocol also comprises what is called Algorithmic market operations (AMOs) or direct deposit modules. The functioning of it is explained in the docs but basically the protocol has the ability to mint agEUR to boostrap liquidity in some places.
One of the main AMOs of the protocol consists in automatically adding agEUR liquidity on Curve in the agEUR-EUROC pool whenever there are more agEUR than EUROC. The protocol also engaged in AMOs to mint agEUR with pools with USDC on other chains, thus taking a slight risk of impermanent loss (covered by the protocol’s surplus).

AMOs have recently been used to bootstrap agEUR liquidity in some places, but one other tool the protocol has to grow liquidity is ANGLE incentives. ANGLE inflation is directed by gauge votes ran by veANGLE holders. The system leaves the possibility to whitelist new pools to receive incentives. A new system was recently added to leave the protocol a full flexibility when it comes to incentivizing UniV3 pools.

Proposals, Implementations & Risks

The proposals here are a set of proposals to be voted independently of one another on the governance forum.

AIP - 47

The purpose of this proposal is to specify with which collateral assets and parameters the Angle Gold stablecoin will be deployed.
Idea here is to start with wETH, wstETH and USDC as collateral assets for the borrowing of agGOLD. This should open the use cases of people shorting XAU/USD and XAU/ETH. Adding wstETH on top of ETH for the use case of shorting the ETH variations of gold is a way to make the protocol more attractive as users would be able to earn a yield while also borrowing their gold stablecoin.
Parameters suggested can be found in this PR of the Angle SDK.

The same AgToken implementation as agEUR, the same treasury contract and the same deployment scripts. This PR gives an idea of how agGOLD will be deployed on Ethereum.


The main risks associated to this proposal are the following:

  • centralization risk due to adding support for USDC and in some way to wstETH (handled by Lido)
  • risk of bad debt due to liquidators not coming in. To look into the parameters suggested in the SDK PR you can check this simulation file and see in which conditions the protocol would be at loss for a liquidation. Parameters are set given predicted agGOLD liquidity and they’re overall far more conservative than for agEUR.

AIP - 48

This proposal consists in pulling 100k USDC from the protocol surplus and swap these USDC into PAXG. This can be done with a minimal slippage on-chain (or OTC with market makers having access to deeper PAXG-USDC liquidity than what’s on-chain).
Following this swap, the proposal aims at giving a minting right to the Angle governance address on the agGOLD stablecoin, and then to mint the same number of agGOLD stablecoins as PAXG obtained. Liquidity will then be added on a Curve agGOLD-PAXG pool to be created upon agGOLD deployment (need contract address).


This proposal would expose the protocol to a risk of loss if the € value of gold was to decrease. Indeed the USDC used to buy PAXG from the protocol surplus come from the agEUR surplus and as such a decrease in the value of the PAXG bought would decrease the value of the surplus that can be used to ultimately protect agEUR’s peg.
In addition, minting agGOLD in a pool with PAXG is equivalent in backing the minted agGOLD with PAXG. And so this proposal (like the proposal below) creates some dependency on PAXG for the protocol. If PAXG was to depeg, then agGOLD would most likely depeg as well.

AIP - 49

While the proposal above aims at setting a manual form of AMO for PAXG, AIP-49 consists in going further and launching for agGOLD an automated AMO that mints agGOLD in the Curve pool with PAXG whenever there are more PAXG than agGOLD in the pool. This would use the exact same contract infrastructure (designed to support multiple stablecoins) as what is done for the agEUR-EUROC pool on Curve. More details on this setup can be found here.

Once there is a gauge in the Curve pool, LP tokens obtained from this AMO could be staked on Convex and StakeDAO to increase the revenue made by the protocol.

Smart contracts for the AMOs of the protocol can be found here.


The major risk for the proposal is essentially the risk mentioned above of creating a too big dependency to PAXG for agGOLD.
It comes as well with a smart contract risk (mitigated though by the fact that the smart contract infrastructure to be used has been in prod for agEUR for several months now).

AIP - 50

A Curve pool is essential to maintain the stability of agGOLD. Yet to further connect agGOLD with on-chain liquidity, it makes sense to bootstrap other pools for it.
agEUR is already a connector token for routes involving Euro stablecoin trades. It should be straightforward to add is as a connector token across different chains.

Proposal is to mint 50k agEUR, the corresponding value of agGOLD, and add full range liquidity to a UniV3 pool agEUR-agGOLD with 0.3% fees.
This would be done through the governance multisig of the protocol.


This is potentially the proposal for which the risks are harder to caliber. It indeed exposes the protocol to a risk of impermanent loss on both sides. If the € value of gold was to increase or decrease, the protocol would lose with respect to the strategy that consists in holding the minted agEUR and agGOLD with providing liquidity with them.
The amount of loss made by the protocol would very much depend on the range of the gold price variations and on the volume on the pool. The bigger the volume the smaller the loss.
We have built an impermanent loss simulator to be able to estimate in which circumstances how much this proposal would cost to the protocol in the worst situation.
If the price of GOLD was multiplied or divided by 2 (which is usually far more than the gold volatility in a year), the protocol would lose 6% of its initial portfolio. As such, in a pessimistic scenario for the protocol (no volume, big price variations), the protocol would lose 6k€ out of this proposal.

Intent with this proposal is to start with relatively small amounts with respect to what the protocol can support ($100k maximal loss with respect to $8m support), and potentially scale up if historically volumes and fees made on the pool are sufficient to offset the impermanent loss that appears out of XAU/EUR price variations. If impermanent loss get too big with respect to the surplus for the protocol, then agEUR and/or agGOLD might end up in a situation of bad debt where there are unbacked stablecoins.

The estimated cost of the proposal is to be put in parallel with the incentives that it would cost to grow agEUR-agGOLD liquidity to the scale desired. 6k€ a year is potentially a smaller cost than the amount of incentives that it’d cost to maintain around 100k€ of liquidity for the time period.

Note that the intent of this proposal is still to maintain agEUR and agGOLD. At the exception of this AMO, agEUR and agGOLD will be fully independent stablecoins with different backing mechanisms and segregated surpluses. This AMO is the only point in common between the two stablecoins, and we propose to use agEUR surplus to compensate for a potential agGOLD bad debt coming from this AMO (or conversely). Apart from this, we propose to keep agEUR and agGOLD as completely independent stablecoins, such that if one fails, the other is unimpacted. If scaled, the size of this AMO should be properly calibered in order not to pose a threat on the two stablecoins at the same time.

AIP - 51

Even though it is proposed to seed the agEUR-agGOLD pool, it is still important to have a way to provide incentives to agGOLD holders. This proposal is to make the UniV3 agEUR-agGOLD pool a gauge for which veANGLE holders can vote to distribute a portion of the ANGLE inflation.

Idea would be to use Angle incentivization system for Uniswap V3 liquidity that maximizes the efficiency given to liquidity providers (no need to stake) while guaranteeing that both TVL (agEUR and agGOLD liquidity) and concentrated liquidity are incentivized. Like all other gauges on Ethereum mainnet, we propose to give a boost of up to 2.5x to all addresses owning veANGLE tokens and participating in the gauge.

Proposed parameters for the incentivization formula are the following: 34% to agGOLD holders, 33% to agEUR holders, and 33% for the fees accumulated on the pool


The risks in setting up a gauge are the risks of a vampire attack where a big veANGLE holder drives a lot (if not all) of incentives to the pool (even though it’s not beneficial to the protocol in the long run). Governance could kill the gauge in this case.

The other risk is to decrease in other places the incentives given to protocol stakeholders. If too much is sent to agEUR-agGOLD LP, then agEUR-USDC liquidity could be decreasing as a result of the lesser incentives being sent.

AIP - 52

The protocol has a flash loan module that is ready for its stablecoins. The goal of this last proposal is to enable free agGOLD flash-loans.
With the limited initial liquidity, and to avoid the risk of potential exploits on protocols using agGOLD, we propose to limit the size of the possible flash-loans to 10% of the agGOLD circulating supply.

The FlashAngle contract that handles flash loans has been audited and it is already in use for agEUR. It only implies a governance transaction (and no new smart contract deployments) to enable this module.


Flash-loans have historically been used in some hacks. Enabling agGOLD flash-loans might expose protocols which are not resistant to flash-loan attacks and which are using agGOLD to some manipulation risk.

Value to the protocol

All together these AIP are here to guarantee that agGOLD will be deployed and usable at a minimal cost (time, incentives and money) for the protocol and the DAO. With the liquidity pools setup through AMOs, it is expected that agGOLD will be from scratch in arbitrage routes involving PAXG and in trade routes used by people buying and selling PAXG.
It will facilitate the movement of people swapping PAXG to agGOLD because there will be no fee on transfer for PAXG, just like it will facilitate trades for people who are looking to hold a gold derivative on-chain.

Thanks to the collateral assets suggested as well for agGOLD, there should be some direct use cases of using the borrowing module: people would be able to short XAU/USD and XAU/ETH.

The development cost of all these AIPs as it just implies relying on the infrastructure already developed around agEUR. While agGOLD is a nice add-on for DeFi, it will also be a way to showcase the whole protocol knowledge and expertise when it comes to stablecoin design and operations.

Feel free to comment any of the specific subproposal and share any improvement or concern you’re seeing with this plan!

I would emphase this part. All minting from agEUR should be seen as lost from the Surplus buffer of agEUR and given to the ANGLE multisig for the benefit of seeding the agGOLD.

It is critical that each protocols is becoming solvent at the smart contract level (i.e. excluding the multisig). agEUR and agGOLD users shouldn’t rely on the multisig.

Regarding AIP-50 what is the amount that could be swapped for a 1% slippage? This will put agGOLD at a deficit, can we take more agEUR from the agEUR surplus and seed the agGOLD surplus in some ways?

Except AIP-51 (but my concern is more on the whole incentive process), the rest looks good to me. It sounds a good and strong foundation even if there isn’t a key unlock that will gives us scale. We need to spend more time on how to create more value for agGOLD holders.

Need to run simulations for the amount that could be swapped for a 1% slippage. I guess it should range to something like 5k.

Technically this operation of seeding with both tokens is a way to seed the agGOLD surplus by taking some of the agEUR surplus.

I agree that there isn’t a key unlock, but at least we’re positioning ourselves to get agGOLD capturing a portion of the volume of gold trades in DeFi.
This is just a first step indeed, and we’ll iterate on how to create more value for agGOLD holders.

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