This is a proposal for how to restore agEUR’s peg.
After Euler’s repayment, a process to swap the received ETH was voted. 7,408.83 ETH were swapped to a total of 15,541,130 USDC, and half of these USDC will be shortly swapped to EUROC.
The current state of the protocol can be consulted here.
The goal of this discussion is to move forward relatively quickly to restore agEUR’s peg.
Now that the funds back agEUR are mostly USDC and EUROC, one way to restore the peg is to allow agEUR to be traded against the Core Module reserves.
As the protocol should be expected to be reworked, keep in mind that this should be a transitory solution that is expected to last a few weeks.
Also, the accepted collaterals wouldn’t change, and the HAs functionality (Perpetual Futures hedging the protocol exposure) would stay paused, accordingly to what was voted here.
With this context in mind, there are three main possibilities:
- Unpause only the burn of agEUR, allowing people to sell agEUR to the protocol at 1€.
- Unpause mint & burn of agEUR, allowing people to buy and sell agEUR to the protocol at 1€.
- As proposed in this governance proposal (option 1), a third option can be to provide the protocol EUROC liquidity to the Curve agEUR-EUROC pool, allowing agEUR to get back to its 1€ peg.
All options would allow arbitrageurs to buy agEUR on the market and sell it at 1€ to the protocol.
Note that the Core module comes with fees, and there would be fees applying for people burning (and minting if option 1 is chosen) through this mechanism.
We propose to set the fees to the value they had on Friday 10th of March (before the USDC depeg), that is to say 0.5%.
Solution 1 has the advantage of only reducing the protocol exposure to USDC by allowing users to sell agEUR against the reserves, with the drawback of potentially reducing a lot the agEUR supply and Angle TVL.
Solution 2 has the advantage of “fully” reopening the protocol and allowing people to mint agEUR with the Core module again, with the drawback of potentially increasing the protocol exposure to USDC.
Solution 3’s advantage is that it removes the need from having to reopen the protocol and taking potentially additional risks. Its drawback is that it is going to be less direct for people to burn they agEUR as they’ll most likely end up with EUROC.
It was voted on this vote as well to unpause SLPs. Currently, as it stands (and as can be seen here), there are:
- 7,376,036.52 USDC on the PoolManager contract with claims of SLPs worth 5,269k USDC and claims of agEUR holders worth 15,620k USDC (as of the 14th of April)
- 4,110,262.81 DAI on the PoolManager contract with claims of SLPs worth 1,372k DAI and claims of agEUR holders worth 1,658k DAI (as of the 14th of April)
- 6,942,822.80 FRAX on the PoolManager contract with claims of SLPs worth 4,997k FRAX and claims of agEUR holders worth 1,888k FRAX (as of the 14th of April).
Should option 1 or 2 be chosen, the protocol would not have immediately all the USDC available to handle all redemptions. Given this, we suggest to swap the 3.4m DAI received from Euler to USDC. There would be a 2.6m USDC gap needed to handle everyone. In case more is redeemed, the protocol could use the obtained EUROC from the swap to sustain agEUR’s peg.
Once again, all the three options are meant to be transitory options, to use at most till a Core module V2 is live and running.
- Unpause only the burn of agEUR, allowing to sell agEUR to the protocol at 1€.
- Unpause mint & burn of agEUR, allowing to buy and sell agEUR to the protocol at 1€.
- Providing EUROC liquidity to the Curve agEUR-EUROC pool, allowing to sell agEUR at 1€ against EUROC on the pool.
Given the fact that keeping a depegged agEUR is harmful to the protocol, we suggest to open this to a vote quite soon and have this vote open for a short period of time (~48 hours).