Hello,
This is a proposal to accept USDC as a collateral for agEUR on mainnet.
Context
USDC is the second biggest USD stablecoin, and the one that is the most widely used in DeFi.
USDC was a collateral for agEUR on mainnet through the Core module, but so far it was never suggested to add it as a collateral on mainnet.
Rationale for this was that enabling people to long the $ and short the € on mainnet through the Borrowing module would have come in competition with the hedging agents feature of the Core Module.
The HA feature has been killed in the aftermath of the Euler hack, and to this extent adding USDC on mainnet would not go against any other element of the protocol.
USDC is a collateral for agEUR on other chains, and it is in some way already a collateral asset as people can use USDC derivatives (like crvFRAXUSDC) to borrow agEUR
Proposal
The proposal is to add agEUR as a collateral for agEUR on mainnet, with the parameters proposed in this pull request and with the oracle implementation suggested here.
Implementation
Launching a new collateral asset is straightforward and only asks to deploy an oracle and a proxy on top of the base vaultManager implementation. It does not imply any extra maintenance.
Value to the protocol
Adding USDC as a collateral would enable people to long the $ and short the € in just a single transaction.
It’d also enable holders of USDC to take advantage of other € yield opportunities with no exchange risk exposure.
Risks
Adding USDC as a collateral comes with the risk of the protocol not being able to liquidate USDC positions in case of a black swan event (like the USDC depeg).
agEUR is already deeply liquid with USDC, and so big trades can be executed with minimal slippage.
Liquidation parameters in the PR are still set so that the protocol can only end up in a loss in extreme conditions.