Start building a long term position on APWine with Angle DAO

Ideas
1

Summary:
Proposal to enter the APWars by providing liquidity and accumulating veAPW voting power.

Because of the many options available, and that there are many variables we don’t have yet as coming from other DAOs decisions, this topic will be in the idea channel until a consensus is reached by the community to propose an actuel AIP.

Context:
APWine is a yield tokenizing protocol, that is interesting for different types of users:

  • Traders can sell their yield in advance or buy yield, so basically long/short APRs
  • Arbitragers can use the fixed rate feature to secure profits by doing arbitrages on the AMM pools
  • Liquidity providers / farmers can add liquidity in the two types of AMM pools : PT/Underlying & PT/FYT.

The protocol works with a two token mechanism, PT (Principal token), which represents your deposit over the period, and FYT (Future yield token) which represents the generated yield over the 90 days period.

The governance token is the APW, which has a ve-model tokenomics similar to curve.

3 months ago, the DAO enabled gauges, which allows veAPW holders to redirect the reward emission on their favorite pools.

New assets are added on each winelisting events, and there is 3 assets interesting for Angle have been proposed:

  • sanUSDCEUR (Angle strategy)
  • eagEUR (agEUR on Euler)
  • mooJarvis2EUR (Beefy vault with agEUR-jEUR Curve LP)

Even if the Angle DAO doesn’t hold any sanUSDCEUR, the two other interest bearing tokens can be interesting to start building a position.

Rationale:
The goal of this proposal is to think about different possible strategies for Angle DAO to enter the APWars by accumulating veAPW voting power.

**Option 1: eagEUR tokenized on APWine **

According to the infos provided by the core team, most of the stables in the Angle treasury are split as follow:

  • 3578372 eagEUR that can’t be converted to avoid changing the AMO, however part of it could be deposited on APWine if eagEUR is voted (up to 30%)
  • 212945 eagEUR held as POL in the treasury, can be converted or added as liquidity
  • 956 agEUR + 733 USDC that can be converted or added as liquidity

If agEUR is voted, one possible strategy could be to use the agEUR in POL to acquire some APW + deposit in the PT/Underlying pool, and the position could be increased with a portion of the agEUR that can’t be converted.

To avoid using the POL, part of the AMO liquidity could be used, starting with 500k eagEUR, which represents 13.9% of the AMO.

At the current rate, 25K eagEUR represents 26.4K USDC, so around 170.5K APW at the current price
As 1 APW locked for 2 years = 104 votes, the Angle DAO would have 17.73M votes.

The current total gauge votes supply is 185.7M, so by locking 170.5K APW, the total supply would be 203.5M votes, with 8.7% owned by Angle DAO.

If we look at the current IBTs receiving rewards with the current prices and emission rates, we can estimate an approximation of the yield.

It’s also possible to add extra rewards in Angle and to bribe veAPW holders to winelist Angle IBTs and/or to get more rewards which can increase the size of the pool and to avoid killing the yield for users.

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On the stETH pool, with 29.7M votes and 930K$ of liquidity, the APR for next week is 20%. So with the same amount of votes and 500K$ liquidity, the APR could be around 37.2%, but with 17.73M votes, the APR could be around 22.2%.

Additionally, when entering in PT/Underlying, 50% of the position is tokenized to obtain PT and FYT. Half of these FYT can be sold in PT to add liquidity on the PT/FYT pool with limited risk too, but these FYT will be needed to redeem the PT before the end of the period if needed.

Option 2: Mint, OTC swap with Jarvis and add POL on agEUR/jEUR on APWine

This option is just to take in consideration for now and gather feedback, as it would have to be voted by both DAOs concerned and the IBT needs to be voted too. .
One possible strategy could be that Angle mint 500k agEUR, and Jarvis mint 500k jEUR (or less if the community think it’s too much)

Both DAOs make an OTC deal of 250K€ for a defined period, which would allow each DAO to acquire a 500K€ POL, and a TVL of 1M in the agEUR-jEUR LP on Polygon.

Then, each DAO could deposit the LPs on the Beefy vault mooJarvis2eur which can be tokenized on APWine to add liquidity in PT/Underlying and accumulate more APW rewards.

To prevent the risk of a depeg, the protocol responsible would be in charge of covering the losses, like it’s done for the Laas with Ondo.

In this case, each DAO would have 500K deposited and the TVL on PT/Underlying would be at least 1M€.
At the current rate, 25K eagEUR represents 26.4K USDC, so around 170.5K APW at the current price

As 1 APW locked for 2 years = 104 votes, the Angle DAO would have 17.73M votes.
The current total gauge votes supply is 185.7M, so by locking 170.5K APW, the total supply would be 203.5M votes, with 8.7% owned by Angle DAO.

If we take back the stETH example, the stETH pool would have a similar TVL than mooJarvis2eur, but with 40% less votes.

It’s also possible to add extra rewards in ANGLE,and to bribe veAPW holders to winelist Angle IBTs and/or to get more rewards. Jarvis DAO can also vote on this pool,add JRT rewards and bribes which increase the size of the pool and avoid killing the yield for the users. Jarvis also have around 4.65M votes.

For 29.7M votes and 930K$ of liquidity, the APR for next week is 20%.

So with 17.73M votes and 1M€ (1.06M$) liquidity, the APR could be around 12.9% with Angle voting power alone. It could go up to 16% with Jarvis current voting power.

Additionally, when entering in PT/Underlying, 50% of the position is tokenized to obtain PT and FYT. Half of these FYT can be sold in PT to add liquidity to the PT/FYT pool with limited risk too, but these FYT will be needed to redeem the PT before the end of the period if needed.

Option 3 : options 1 + 2

This one is a long shot and would require several proposals but,

  • If the Angle DAO is interested to do both strategies
  • If Jarvis DAO votes for the 2nd one
  • If both IBTs are voted

In this scenario, the TVL of the PT/Underlying on eagEUR would be at least 500K€, the TVL on PT/Underlying on mooJarvis2EUR would be at least 1M€ and the the Angle DAO and Jarvis DAO would have respectively 1M€ and 500K€ deployed in liquidity.

Option 4: Buy & lock APW to accumulate veAPW voting power

To illustrate the possible rewards, I added the voting power calculations, for 25k eagEUR invested in Option 1 and option 2.

This would be a good solution for the Angle DAO to accumulate initial voting power in case one of these options is chosen. In this scenario, part of the eagEUR in the POL address can be used, up to 25K agEUR.

Option 5: Bribe veAPW holders

If the Angle DAO prefers to bribe rather than buying and locking APW, it’s possible but there is no interface to do it, and no one has ever bribed on APWine for gauge power yet, so it might be tricky to evaluate the value of 1 vote. Angle would have to communicate about the bribe, then airdrop the corresponding amount to each wallet who voted. In this scenario, some ANGLE tokens can be used to pay the bribes.

Option 6: ANGLE x APW token swap

Considering the difference in value between both projects at the moment, a token swap might not be the best choice for APWine DAO.

However, If the option 3 is chosen, we could propose a token swap up to 25K$ in ANGLE for APW in addition to the 25K ageur acquisition from the 2nd strategy, which would approximately double the veAPW voting power for Angle DAO, and allow to deploy both strategies without spending too much stables in APW buys to get enough voting power.

Means:

  • Up to 50K$ in APW (token swap included)
  • Up to 1M€ deployed in LPs
  • Potential bribes to make sure the IBTs are voted on the next winelisting, and/or to accumulate more rewards on Angle pools once voted.

Technical implementations:

  • Get Angle DAO whitelisted to lock APW
  • Deploy the funds in farming if voted
  • Vote to allocate more rewards on the pools
  • Calculate the TWAP price and make the token swap

It’s possible to select up to two options on the poll, which can represent one vote for option from 1 to 3, and one vote for options from 4 to 6.

Voting options:
OP 1 : eagEUR tokenized on APWine
OP 2 : mooJarvis2eur POL tokenized on APWine
OP 3 : eagEUR + mooJarvis2eur Strategies
OP 4 : APW buy & lock
OP 5: Bribe veAPW holders
OP 6: ANGLE x APW token swap + buy & lock
Do nothing
Abstain

Should we implement some of these strategies ? If yes, which ones ?
  • OP 1 : eagEUR tokenized on APWine
  • OP 2 : mooJarvis2eur POL tokenized on APWine
  • OP 3 : eagEUR + mooJarvis2eur Strategies
  • OP 4 : APW buy & lock
  • OP 5: Bribe veAPW holders
  • OP 6: ANGLE x APW token swap + buy & lock
  • Do nothing
  • Abstain

0 voters

2

Thanks for this excellent and super detailed proposal @dydymoon.eth! On my side, I believe it’s interesting for the Angle Protocol to start working with the APWine team and community.

My take on this is that we should be favoring the eagEUR use case. While I understand the opportunity with mooJarvis2EUR, it’s a bit riskier for the protocol to engage in these strategies since Angle could end up in some way backed by jEUR (if the Curve pool starts to be imbalanced). This may not be dangerous but this type of liquidity AMO can have implication.

Also, I am a bit neutral on the token swap, I think just bootstrapping with some of the AMO liquidity could be sufficient. I get the rationale on acquiring veAPW tokens, but owning tokens and voting for gauges should not be the main driver of why people use a product. I’d rather also start with a relatively small share of the AMO and give us the opportunity to ramp up if we see it working well.

1 Like
3

Thanks for the feedback !

If we’re using a similar process to Ondo, let’s say for example the swap is for 6 months, if the pool is unbalanced at the end, the project who can’t pay back needs to assume the IL.
This could be decided to be renewed for another 6 months if everything goes well etc.

We could also start with a lower amount, maybe 200k with a 100k otc swap ?

I think the token swap should come into play if the option 3 is picked, as it would allow Angle to deploy both strategies without having to buy twice the voting power described in the examples.
Otherwise it’ can be better to acquire some initial voting power or bribe to bootstrap the strategy

Of course not, the main goal behind this is to have pools deep enough for users to be able to trade their yield in adance and enjoy all the APWine features.

Considering that Angle DAO is one of the main eagEUR holders, it’s possible that no one else vote to allocate rewards on it, which is why I think that it’s important for Angle to get initial voting power, unless if bribes comes in.

I thought 10% of the AMO seemed fine, but maybe I misunderstood something. How much do you think would be a good share to start with ?

4

Hey @dydymoon.eth, thanks a lot for the proposal!

Option 1: eagEUR on APWine

One issue I see with option 1 is that I don’t really see how eagEUR for APWine would be valuable with our current plans for AMOs. Our goal is to do something similar to Maker’s 3DM. Angle would deposit / remove agEUR on Euler to target a borrowing rate of 3%. If done successfully, splitting yield between fixed and variable as done on APWine would not make sense for eagEUR.

Option 2

I personally share the same concerns than @sogipec about Jarvis and the mooJarvis2EUR option.

APW token options

About buying the tokens, I usually don’t feel like it’s a good idea unless there is very good and obvious reasons to believe the token would be useful for the protocol other than for investment purposes (in the case of a partnership for example).

5

Hey @tuta thanks for the feedback, sorry for the late reply !

Even with the points mentioned in my answer ? I don’t think that the risk is huge with a 200k mint and 100k swap wdyt ?

The yield is represented by the FYT, which can be sold or used to add liquidity, and the PT is the IBT tokenized on APWine.

It’s actually the case, because in addition to the value of the locked assets, you get voting power to be a part of APWine DAO, which can help to wine-list other angle strategies in the future, you also get gauge weight power which can be used to redirect more incentives on Angle IBTs, which means less incentives in angle, and a yield for the DAO who is LP.

Also we’re working on adding a veBoost which will be helpful if there are several angle pools on APWine in the future.

I already see it as a partnership actually, and if the token swap option is picked, the ANGLE will be locked by APWine DAO if voted, not sure how to increase it more for now, but interested if you have ideas about this ?

1 Like
6

Gm everyone !
The winelisting vote is over, both eagEUR and mooJarvis2Eur have been winelisted, the IBTs pools should be live in the coming days :wine_glass:

I can work on updating the numbers of the proposal as it’s 1 month old, but i’d really love to get more feedback before pushing the vote on the governance

1 Like
7

That’s a great news

So since the DAO does not own any mooJarvis2EUR, I think it’d be great to restrict the proposal and vote to eagEUR!
Whether mooJarvis2EUR should be concerned or not is something which would be more profound than just this proposal as it implies: whether Angle wants to start owning jEUR at some point or not.

8

I forgot to mention that SanUSDCEUR is also winelisted, if you think it would be a best fit for the treasury

However 2EUR is on Polygon so it would be good to have some liquidity there too, even if it’s a small one.
The initial proposition was to swap OTC 250k agEUR for jEUR, but we could reduce it to a 50-100k swap at first to see how it goes, which would have very limited risk exposure for both DAOs

9

Ok, I get it, but really not a fan of this proposal either even if it’s a small one! I’d rather focus on building such AMOs on Curve with EUROC for instance rather than jEUR

1 Like
10

I also forgot to mention that instead of using part of an AMO for the eagEUR deposit, maybe it would be better to create a specific AMO of 500K agEUR for tokenization and liquidity provision on APWine.

It could allow to manage it easily to reduce or increase the position depending on the governance decisions.
If eagEUR strategy is kept but not the 2EUR or sanUSDCEUR ones, the initial voting power can also
be reduced.

At the current rate, 20k agEUR represents 20.43K USDC, so around 92.3K APW at the current price.
As 1 APW locked for 2 years = 104 votes, the Angle DAO would have 9.6M votes.
The current total gauge votes supply is 246.7M, so by locking 93.2K APW, the total supply would be 258.3M votes, with 3.7% owned by Angle DAO.

With the current votes and distribution, the eagEUR would be around 8.7% APR.
In addition, Angle DAO would accumulate a yield on the veAPW (6.9% APR)
It’s also possible to add extra rewards in ANGLE or to bribe veAPW gauge weight power.