AIP - 98: Seed USDA and EURA Steakhouse Metamorpho on Base

1

Context

In an effort to increase USDA and EURA adoption on Base, this proposal increases the utility of those tokens on Base by providing lending facilities. Built on Morpho and curated by Steakhouse, the proposal will improve utility but could also increase revenues and liquidity…

Proposal

  • Seed 500k USDA into steakUSDA on Base
  • Seed 500k EURA into steakEURA on Base

Rationale

A growing L2 without much stablecoin competition

Base is showing significant traction, having a transaction throughput above Ethereum for weeks now (>30 TPS vs 12 for Ethereum). The main stablecoin used on Base is USDC but there is little competition from DeFi stablecoins. Moreover, EURC is not even deployed on Base leaving the EUR-stablecoin market completely unfulfilled.

Accretive to Angle revenues

The vaults will target to earn at least the alternative revenue stream. In the case of USDA this will be the steakUSDC (Ethereum) supply rate (currently ~7%). In the case of EURA, we will use bC3M (currently ~3.5%) with a slight discount due to transaction fees. This is achieved by only deploying the MetaMorpho supply when borrow demand is adequate.

Those conditions will translate to preferable borrow rates for borrowers due to the fact that:

  1. steakUSDA and steakEURA are not charging fees
  2. The USDA and EURA supplied but not borrowed doesn’t cost anything to Angle and can be disregarded.

Exact formula could be changed by the vault curator depending on market conditions in line with the intent previously described. At Steakhouse we have built leading off-chain infrastructure to optimize vault management for stablecoin issuers. Steakhouse vaults lead on Ethereum mainnet by TVL, reflecting growing user choice of governance-minimized MetaMorpho markets.

New mechanism to control the peg

The allocated amounts are quite small and shouldn’t impact the peg of either USDA or EURA. Nonetheless, our technology could allow an increase in the borrow rate if Angle’s liquidity position (and the peg) should be threatened.

Value to Protocol

  • Increase utility of USDA and EURA on Base by providing loan facility
  • Increased revenues
  • Custom needed development will be done by Steakhouse as part of our alignment to the success of Angle

Read Steakhouse disclaimers

2 Likes
2

Thanks for the excellent proposal here!

I’m definitely in favor of this one: USDA & EURA are both liquid on Base and so it does not put any significant bad debt risk for the protocol to have these markets ready.

In terms of implementation, there are different options when it comes to how to seed these vaults.

We could either:

  • use EURA and USDA from the treasury of the protocol
  • we could mint EURA & USDA on Ethereum, bridge to Base and then seed the vault on Base
  • or we could mint directly EURA & USDA on Base

This last option seems less optimal as it means that someone borrowing on Base could potentially be blocked on the chain and unable to bridge on other chains if there hasn’t been any prior bridge from Ethereum to Base.

The first 2 options are equivalent in a way, it just changes how accounting is done on the protocol

1 Like