Protocol Profits and SLP Redemptions

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 swapped to EUROC. The current state of the protocol can be consulted here.

This leaves the protocol with a profit of ~1,580,586$ (final number to be confirmed) compared to its pre-Euler hack situation, which could mitigate the loss that the protocol made during the USDC depeg (approx. 640k USDC) and the changes in the USD / EUR while the protocol was paused (approx. 350k USDC).

Prior to the hack, the parameters for profits made by the USDC strategy (the one affected) were for instance the following:

30% for sanTokens (SLPs), 50% for veANGLE, 20% for the protocol surplus, ultimately benefiting agEUR collateralization.

We see 2 options on how to deal with this unexpected profit:

  1. Respect the pre-hack strategy parameters, and distribute 30% of the profit to all SLPs (not only USDC) proportionally to their balance of sanTokens over some predefined time period, 50% to veANGLE linearly over a year, and keep 20% in the protocol surplus
  2. Keep this profit into the DAO to strengthen agEUR’s reserves, and to make up for the USD/EUR rate changes and for the loss during the USDC depeg

We’ll suggest voting options with details regarding the technical implementations once we’ve gathered some feedback. Looking forward to hearing your thoughts on this or alternative options!


I think the most fair and consistent way to handle the “profit” is to piggyback on the sentiment of the agEUR seniority vote. The consensus seemed to show (as was my viewpoint), that sanUSDC should be most junior and subject to first losses, since the USDC hacked was from that strategy. By the same token, sanUSDC should also receive these benefits (30% of the profits). The other SLP’s were going to be made substantially whole in the case where Euler was unable to recover the hacked funds. so sanUSDC, by taking the most risk, now should receive this welcome reward (of the SLP share).

The split should remain the same (30% for SLP, 50% for veANGLE, 20% to the protocol surplus).

The other point I wanted to make is that I think the distribution to veANGLE holders should be done in a lump sum, not distributed over 12 months. The reasoning is that if the situation had turned out badly, there is a distinct possibility that Angle Protocol would not have survived, and those who locked ANGLE and believed in the protocol would have gone to zero. This level of commitment should be respected and rewarded. Otherwise, people who had never locked any ANGLE before, could start locking now and reap rewards without having taken on any of the risk.

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Streaming excess profit over a 12 month period is the same as spending it on protocol growth/incentives. If True: The objective is to restart and grow the protocol. This would be comparable to Amazon choosing to grow to a multi billion dollar market cap rather than pay dividends. The streaming of incentives compounds and multiplies the value of veAngle alongside a protocol restart.

As stable coin inflows are just getting started for this cycle it seems better considered to identify how to compound the advantages that the protocol has rather than spend it immediately.


Thanks @GTRminator for your comment.

For the veANGLE part, I think distributing the 50% over a year would be a good trade-off between rewarding past veANGLE for their commitment, and maintaining a decent rate for veANGLE. Especially if you take into account the fact that if we go for a Core Module V2, revenues for veANGLE should drop significantly in the short term.


I get the point of @GTRminator, you think sanUSDC can share all the 30% bonus and I’ll agree if only sanUSDC would have covered the loss but it was not decided.
You take the exemple where others sanTokens were senior to sanUSDC but we didn’t know what would have been the final vote : agEUR > HAs > sanTokens was also an option and if veANGLE holders decided to vote for this option, ALL sanTokens would have been impacted.
One thing is sure : Every sanTokens were impacted and were junior to agEUR, all sanTokens should share the 30% bonus.

Hey everyone, sharing my thoughts here.

I see a third option (cc @gnrv): distribute 30% of the profit to SLPs and keep the remaining funds to the DAO to be distributed later either to veANGLE holders, or to incentivize agEUR growth.

Though it only postpones part of the problem, it allows the DAO to resolve the main issue on which most seem to agree: distribute 30% to SLPs over a predefined period.

I disagree that sanUSDC holders should receive all the surplus distributed. Though in this particular case their were the ones affected, it’s not true to say they took larger risks than other sanToken holders. The vote also didn’t specify any seniority between sanToken holders.

As stated by @tuta, I am in favour of another option “distribute 30% to SLPs and 70% to the DAO”.

The surplus would have been drained first, it is linked to the DAO and not the veANGLE holders per say. Of course they can make a vote to redistribute profits as they wish in a second time. But let’s all keep in mind, as @N10XLY stated, there is a trade off between long term investment and distributing profits.

Back to the distribution I find a bit random to distribute exactly 50% of Euler hack proceeds to veANGLE, instead of calibrating for an exact APR.

Since SLP seems to be written out of the next version of the system, it would make sense for those profits to be distributed more in a one time payment versus over a set period of time.

What do we expect the position of sanToken holders to be going forward in the system at least until v2?

On SLPs being written out of the next version of the system, idea is that the new system will not need SLPs, but the stack upon which SLPs rely today could still exist.
Like SLPs can keep existing independently of agEUR (like simple Yearn strategies). If you put the Euler hack aside, there is still a significant value in the strategies implemented in the protocol, and I feel it’d be a shame not to use this as a product separate from agEUR.


Hey guys,

I think it’s fair to keep the pre-hack logic with 30% for sanLP, and the rest for veANGLE and reserves. Given the post hack discussions where pointing towards keeping the same risk / seniority waterfall as before the hack, leading to a nearly 100% loss for sanLP, it’s fair to apply the same logic when things are going in a more positive direction.
Then, whether it is paid as veANGLE rewards or stays in treasury is a decision to be made by veANGLE holders who have the ultimate claim over the treasury anyway (if I understand it correctly). So for veANGLE, whether it’s distributed or kept as security pocket is a bit left pocket / right pocket.

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I see your point, so essentially, what you suggest is to vote on 30% rewards for SLPs and then veANGLE could decide later what to do with the proceeds, if something needs to be done?

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Can both be done on the same vote tbh. No point in multiplying the governance proposals.
Was just saying that both split are not of the same nature.
I think it’s fair to keep the split between SLP and veANGLE+Treasury as they were before the hack. Then for the split veANGLE v/s treasury, I think due to the exceptionnal nature of this distribution, it’s totally fine to discuss the share that should be kept in the treasury to help the protocol future success, since it will also directly benefit the veANGLE holders.

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For having both options in the same vote, I think it’d multiply the options given that for SLPs there are different options to consider, and same for veANGLE.
Like there is a debate on whether rewards given to SLPs should be given over a short time period rather than in a lump sum (I personally think it makes sense to spread the distribution for ~a month).
So essentially if you couple each SLP option with each veANGLE option, you end up with a multiplicated amount of options, which makes it more confusing in the end.
The SLP distribution can be seen as independent from the question on veANGLE.

Ok, makes sense to split proposal.
What’s the rational for spreading the distribution for SLP over a month? I thought you wanted to deprecate those strategies. If so, why blocking user capital for a month?

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The plan is to keep the strategies, but they will be dissociated from the stablecoins. These strategies will be offered as another Angle product, and I believe they have value over our competitors. Our past expertise will enable us to develop even more advanced strategies.

Regarding the allocation of Euler proceeds, I think that SLPs should receive part of the excess profits. However, I don’t believe that distributing the funds all at once is the best solution. Instead, I propose that we release the full balance entitled to SLPs pre-profit without further ado, and then vest the additional 30% linearly over a month. This way, no account is blocked and everyone has a rightful claim to their assets without further delay.

By distributing 30% to SLPs, the protocol has the opportunity to prove that it can still provide valuable strategies to sanToken holders. This solution would be to reward accounts that are aligned with Angle’s long-term vision and success. If we release everything at once, it’s a win for all the accounts but a loss for the protocol. However, if we release the funds over a period, it’s a win for long-term aligned accounts and a win for the protocol.

While I do agree we should stay in line with the “30% to SLPs”, I would respectfully disagree on distributing it over a month (or any period of time).

From what I understand, the main argument in favour of distributing it over a month is “to reward accounts that are aligned with Angle’s long-term vision and success”. However, I fail to see how it does so. In my eyes:

  1. Distributing over a month simply pushes back the problem: those that are not aligned will simply exit in a month.
  2. This will kind of ‘fake’ the APR for a month, maybe resulting in users feeling tricked?
  3. SLPs have probably been under a good amount of stress over the last month and some probably feel frustrated of having their funds locked for a big period of time.

On top of that, @sogipec mentioned that “SLPs can keep existing independently of agEUR” and @gnrv said “they will be dissociated from the stablecoins”, so it is my understanding that keeping SLPs here is not a requirement but more of a “wish” to keep TVL.

To recap my POV: I feel like distributing 30% is kind of holding SLPs “captive” (might be a strong word), and won’t reward “aligned” users at all. Since the protocol doesn’t need SLPs anymore, I think they should be free to leave if they want (with the 30% distributed when they claim back, not over a period of time). I believe it is better for the protocol to let users go rather than keeping them just because they want this extra 1-month reward. If the SLP product is good anyway, they will come back ! :slight_smile:

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Thanks for this point @pscott!

As far as I see, there are several options discussed here:

  • opening SLPs deposits and withdrawals and rewarding them with 30% of the profits from the hack immediately
  • opening only SLPs withdrawals and distributing 30% of the hack profits over a 30 days timeframe through the gauge contract corresponding to each collateral.

On the distribution of the profits, given that in case of a loss for the hack, all SLPs would have probably been equally impacted (the slippage parameter in the protocol looked into the global collateral ratio), my proposal is to spread profits between all SLPs (USDC, DAI, FRAX, FEI and wETH) proportionally to the share they represent in the TVL.

This Excel file gives the breakdown that would correspond to this.

I think this can be moved to a vote as soon as possible so SLPs know what they’ll be getting and when.