Hey everyone,
This is a proposal to start lending a portion of the reserves of the protocol to Euler Finance.
Context/Description
Angle Strategies
Angle Protocol mostly owns in its reserves USDC and DAI. The protocol generates revenue by investing these USDC and DAI in yield strategies.
The biggest strategy used by the protocol is a simple strategy forked from Yearn consisting in lending to different protocols and allocating more (if not all) resources to the protocol which yields the biggest APR. We call this strategy the Optimizer APR strategy.
To check out where it’s used, and with which protocols this strategy interacts, you can check out:
So far, the strategy mostly lent to Compound and Aave: APRs used to be bigger on Compound over the last few months, but recently more resources have automatically been allocated to Aave.
What we propose doing here is including for USDC and DAI the Euler protocol as a potential lender.
Euler Protocol
Euler is a decentralized permissionless lending protocol relying on UniswapV3 oracles.
The protocol’s TVL has grown by a lot recently to reach approximately $220m. Angle has deployed one of its first algorithmic market operation on Euler with 1m agEUR that have been directly minted there, and it is still one of the most fruitful single-sided yield opportunity for agEUR holders.
While yields are quite variable, over the last few weeks, the USDC lending yield has been substantially bigger than that on Compound/Aave.
Here are some key metrics of Euler as of the 14th of June 2022:
- TVL: $227m
- 3918 lenders
- 815 borrowers
- $769.61k in reserves
- Total supply (people fold on Euler): $493m
Proposal
The proposal is to add a GenericEuler contract to our OptimizerAPR strategy for USDC and DAI.
This contract should simply lend what it gets to control to Euler, withdrawing the funds when needed.
Added value to Angle and its users
As Euler yield are consistently higher than on Aave/Compound, having such a contract should increase the efficiency of our yield strategies thus bringing more revenue to our Standard Liquidity Providers, veANGLE holders and to the protocol’s surplus.
Since the strategy is designed to invest in places where it’s most profitable, if Euler yield start to be inferior to Compound/Aave yields, then the protocol will simply reinvest its funds to these protocols.
Risks
By doing so, the protocol would start being exposed to Euler. The Euler protocol has undergone many different audits
Implementation requirements
The GenericEuler contract is on the verge of being released. It has been fully unit-tested and its architecture is very similar to that of other GenericLender contracts handling the reserves of the protocol on Aave and Compound.
As such the implementation requirements are pretty minimal, and once voted this lender could be deployed pretty rapidly.