[REVIEW][GF: Phase 1 Proposal] Angle Protocol

šŸ“œ Grant Proposals Governance Fund: Phase 1
, ,
1

Hi everyone!

This is the latest update of the proposal edited by @BlockAdopter from the Angle team.

This update takes into account feedback from the delegates. Thank you for your input and for helping us improve this proposal.

Condensed summary of the updated proposal

  • Angle is applying for a 250k OP tokens grant
  • 250k OP tokens to be distributed over 6 months as follows:
    • 2/4: agEUR - USDC pool on Uniswap V3
    • 1/4: agEUR - OP volatile pool on Velodrome, in the form of bribes
    • 1/4: agEUR - MAI volatile pool on Velodrome, in the form of bribes
  • More weight to the Uniswap pool as this rewards LPs as opposed to bribes that risk attracting mercenary participants (we changed the distribution following feedback from delegates)
  • Also Velodrome is an Optimism-only platform and this favors the Optimism ecosystem.
  • Matching incentives: Angle will match the amount of votes obtained on Velodrome using OP from this grant with Angleā€™s resources (either voting power, either through bribes).
  • Bonus for contributors on Optimism: Angle to grant 10,000 $Angle tokens to each author of a contribution made to Angle Protocol on Optimism (that is double the rewards offered to contributors on other chains)

Long form proposal (updated)

This is the GF Phase 1 Proposal from the Angle Protocol. The goal is to help push the adoption of agEUR, a robust and decentralized EUR-stablecoin, and its underlying platform Angle on the Optimism network.

Project name: Angle Protocol

Author name and contact info: @BlockAdopter, can be contacted through Twitter or Discord (TheBlockAdopter | Mariam#7290) or @tuta, can be contacted through Twitter or Discord (tuta#3689).

I understand that I will be required to provide additional KYC information to the Optimism Foundation to receive this grant: Yes

L2 recipient address: 0x3245d3204eeb67afba7b0ba9143e8081365e08a6

Grant category: Governance Fund Phase 1

Is this proposal applicable to a specific committee? [y/n, link to committee] Yes, DeFi Committee

Project description (please explain how your project works)**:**Angle is a decentralized and over-collateralized stablecoin protocol that launched agEUR, the leading decentralized EUR stablecoin on Ethereum.

Angle Borrowing module works similarly than Maker, with improvements on many aspects: users can borrow stablecoins after depositing tokens as collateral, and get liquidated if the value of this collateral goes below a certain threshold. It is deployed natively on Optimism, allowing users to borrow or get leverage with agEUR against OP, USDC, and wETH. Angle is also planning to offer yield and investment products in the future.

Project links:

Additional team member info (please link):Co-founders Discord/Telegram: sogipec#6666 / @pveyrat, Picodes#0368 / @Picodes, gnervo#9112 / @gnervo

Please link to any previous projects the team has meaningfully contributed to: NA

Relevant usage metrics (TVL, transactions, volume, unique addresses, etc. Optimism metrics preferred; please link to public sources such as Dune Analytics, etc.):

  • Angle TVL ~$75M, with currently > 300k on Optimism.
  • agEUR total supply > 45M ā‚¬
  • agEUR daily transaction count > 100
  • agEUR weekly DEX volume > 30,000,000 agEUR
  • agEUR total transfer volume on-chain > 5B agEUR (includes all types of transactions)

Competitors, peers, or similar projects (please link):

Maker
QiDAO
Frax
Liquity

Is/will this project be open sourced? Yes, Angle is already open-sourced. Everything can be found in this repository.

Optimism native?: Angle Borrowing module has recently been launched natively on Optimism. $agEUR is a native Optimism asset. Angle was originally launched on Ethereum in November 2021.

Date of deployment/expected deployment on Optimism: Angle Borrowing module contracts were deployed on Optimism in mid-July 2022.

Ecosystem Value Proposition:

  • What is the problem statement this proposal hopes to solve for the Optimism ecosystem Having a robust and decentralized EUR stablecoin natively on Optimism.
  • How does your proposal offer a value proposition solving the above problem? agEUR is one the leading decentralized EUR stablecoin on-chain, and can be minted natively on Optimism. Angle also allows users to get leverage on their OP tokens by borrowing agEUR.
  • Why will this solution be a source of growth for the Optimism ecosystem? Growing agEUR on Optimism is a way to attract all DeFi users which have the EUR as their local currency to the network.

Has your project previously applied for an OP grant? No.

Number of OP tokens requested: 250,000 OP

Did the project apply for or receive OP tokens through the Foundation Partner Fund?: No

If OP tokens were requested from the Foundation Partner Fund, what was the amount?: NA

How much will your project match in co-incentives? We will match the grant in incentives with Angleā€™s own resources. Please see the detail of these co-incentives below.

Proposal for token distribution:

How will the OP tokens be distributed?

Here, we lay out a revised proposition for the distribution of the received OP tokens, and a new way for Angle to help push Optimismā€™s adoption.

A) 100% of received OP tokens to be distributed as liquidity incentives, linearly over 6 months between 3 agEUR pools.

The 250,000 OP tokens would be distributed linearly over 6 months, for a total of 10,416 OP / week. This distribution would be split between 3 pools as follows:

  • 2/4: agEUR - USDC pool on Uniswap V3 directly, with the option of having LP liquidity managed by @Gamma. (We have by the way created a new UniV3 LP incentivization mechanism detailed here, and we hope to push for a more global adoption on Optimism);
  • 1/4: agEUR - OP volatile pool on Velodrome, in the form of bribes; and
  • 1/4: agEUR - MAI volatile pool on Velodrome, in the form of bribes.

This would amount to:

  • 5208 OP / week in the Uniswap V3 pool, or ~$3,750 at a price of $0.72 / OP; and
  • 2604 OP / week directed to the agEUR - OP and agEUR - MAI Velodrome pools, or ~$1,875 at a price of $0.72 / OP.

This is equivalent to $7,500 x 52 = $390,000 / year distributed on the three pools ($190,000 over the 6 months of the program), or a ~4% APY per pool with $10m in liquidity in all pools over the first 6 months.

Depending on where the APY stabilizes, we can expect around $3-4M of $agEUR to be minted on Optimism across these pools. As $OP is now accepted as collateral to mint agEUR on Angle, this creates an interesting opportunity for $OP holders to increase the token liquidity without selling some of their tokens.

B) Angle matching distributed $OP incentives on Velodrome

Angle will match the amount of votes obtained on Velodrome using OP from this grant with Angleā€™s resources (either voting power, either through bribes from Angleā€™s own capital).

This means, for example, that with a value of $7500 OP tokens distributed each week, Angle would be voting or bribing with a minimum of $7,500 worth of votes or bribes per week in favor of the agEUR - OP and agEUR - MAI on Velodrome per week.

C) Doubling Angle contributions program for Optimism contributions during the span of the $OP incentives.

As detailed here, Angle is currently running a program rewarding external contributors with 5000 ANGLE for meaningful contributions. As this is currently under the discretion of the Angle team, we understand that OP tokens shouldnā€™t be used to reward such contributions.

To push Optimismā€™s adoption, we think it would be a great idea to double these incentives to 10,000 ANGLE when the Angle contributions are made on Optimism. This would require a DAO vote on our side, but we are confident Angle community will be in favor of such a proposal.

Please see the top of this post to access a condensed summary of the proposal.

8 Likes
2

A few questions about this proposal:

When do you plan to offer your dApp on the Optimism Network?

For your liquidity incentives, would it be possible to target Mainnet LPs specifically in order to incentivize a migration of positions to Optimism?

As currently written, the suggested OP token distribution provides ranges and does not add up to 100%. Would it be possible to add clarity to this before it is voted on?

Leaving OP tokens with the DAO does not ensure that the tokens will be used to incentivize usage and liquidity. I would be opposed to that inclusion.

3 Likes
3

Thanks for your questions.

I added the estimated deployment date of July 2022 to the post. It could very well end up being August.

I also specified the distribution, and lowered the DAO share from 20 to 10%. The goal here is to align incentives between Angle and Optimism by having skin in the game and involving the DAO into Optimism governance.

If the Token House donā€™t think this is the right way to do so, then we can distribute everything as incentives.

1 Like
4

Rewarding LP pools is useless and drives temporary and fake adoption. I donā€™t see remotely how this proposal will drive adoption of Optimism.

5

It drives adoption of Optimism (or any network really) in that it brings users and liquidity to the network.

As we have seen multiple times, this helps a lot with growth but usually attracts mercenary capital that leaves once incentives dry up (i.e. ā€œfake adoptionā€ indeed). However I think those LPs leave for two reasons: 1) believe the tokens they are farming are worthless, and/or 2) they donā€™t believe the network in question has the chance to get more adoption than any other competitor.

If you believe these LPs think that for Optimism, then I agree Optimism shouldnā€™t distribute OP incentives to LPs. Personally, I believe what I shared in the message above and hope itā€™s true:

If you have any other alternative to drive Angle & Optimism adoptions together, feel free to share it here.

6

The problem with liquidity incentives is that they are generally unsustainable and projects need to find new ways to grow and bring liquidity rather then needing liquidity incentives which when they run out the projects dies off.

Yes, I bet a lot of the liquidity getting pulled is because people farm worthless projects. The problem though is there is always another project on the same network which will be providing liquidity rewards or a higher APR. So when your project runs out of rewards they will just jump over to the next project and your liquidity will dry up.

7

I wish all the project focusing mostly on LPer incentive see your comment and understand that LP incentive will not last. Once the incentive is gone, users will be gone too because they came for the reward.

2 Likes
8

To be honest I think Angle will have a somewhat unique value proposition for Optimism users once itā€™s deployed there.

It will be (I think) the first borrowing based stablecoins protocol on Optimism, issuing agEUR so a EUR-pegged stablecoin. It will also be one of the cheapest way to borrow stablecoins and get leverage on-chain.

Thanks to Optimism lower fees, the minimum debt size will be lower than on mainnet, opening the app and its use cases to smaller borrowers.

9

Since this proposal is basically encouraging LPs of Angle assets, could you provide more details (do you have any draft?) About which DEXs (and ranges, if applicable) do you plan to encourage liquidity? agEUR with other EUR Stablecoins (sEUR, EURT), or with USD Stablecoins? What is your priority here? Do you also plan to encourage a pair with ETH, OP or your own governance token, ANGLE?. Thank you

10

Sure. This will likely end up being voted by veANGLE holders on Snapshot, but I think these are the most natural pools to incentivize for Angle, agEUR, and Optimism:

  • agEUR-USDstable and/or agEUR-EURstable
  • agEUR-ETH
  • agEUR-OP

I donā€™t have any specific distribution preference between each of those pools though. Maybe a little bit more on ETH and OP ones to compensate for IL?

Ethereum mainnet deployment

By the way, we have deployed the Angle Borrow contracts on Ethereum mainnet, and they are accessible from our new app.

This is what would be deployed on Optimism.

Docs: Borrowing Module Overview - Angle Docs
Developers docs: Architecture Overview - Angle Dev Docs (addresses can be found here)
Github repo: GitHub - AngleProtocol/angle-borrow: Smart contracts for the Borrowing module of the Angle Protocol

1 Like
11

Hey everyone,

Pablo from Angle Protocol and co-author with @tuta of the Angle Incentive proposal.

Iā€™d like to give some updates about the state of Angle incentive proposal.

Angle Project Update

First on Angle and Optimism. The protocol was just deployed on Optimism: it is now possible to borrow agEUR for 0.5% a year on Optimism against ETH and USDC.
New collateral types can easily be added so we could technically support OP for instance.
Everything happens here and the smart contract addresses can be found here.

To start creating flywheel effects, the protocol has seeded a $400k pool with USDC and agEUR on Velodrome and acquired 2m VELO tokens (for $90k) locked for a period of 4 years.

agEUR is therefore a liquid Euro stablecoin on Optimism, and itā€™s now easy and super cheap to get leverage on ETH or on USDC through Angle protocol on Optimism thanks to the seeded agEUR liquidity.

Updates on the proposal

Number of OP tokens requested: 250,000 OP
We propose to reduce the number of requested OP tokens from 500,000 to 250,000, and leave us the room to apply again for 250,000 additional OP (or whatā€™s necessary then) when we have more evidence of our success.

TVL on Optimism: Official announcement has not been made yet but 200k agEUR have already been brought to Optimism, and the protocol has already committed more than $500k to the Optimism ecosystem.

How will the OP tokens be distributed?

Based on communityā€™s feedback on the proposal, especially about the fact that LPs can be mercenary.
Following up on @tutaā€™s comments, growing liquidity is essential for Angle product to be attractive: otherwise thereā€™s no point in getting leverage on agEUR, and weā€™ll slowly and smoothly decrease OP rewards so that in the end APY comes mostly from fees of people using the pool to sell agEUR to get leverage or to buy agEUR to repay their debt.

What we propose as well is to amend the reward smart contracts to propose a lock to LPs: idea is that LPs which are locked for a certain amount of time (up to 1 year for instance) receive more rewards than those that do not lock.

On top of that, to make the distribution clearer, what we propose is the following:

  • 80% for agEUR liquidity on Optimism (spread between Velodrom - agEUR/USDC to start with- and Curve)
  • 20% for bounties and teams building on top of Angle on Optimism

Over what period will the tokens be distributed

1 year

How much will the project match in co-incentives

The project has already bought some VELO tokens to incentivize liquidity on Optimism. We will keep voting for our Optimism pools with these tokens and make sure that VELO rewards are higher than OP rewards distributed to LPs. Based on the different token prices, we may include some ANGLE rewards to make sure thereā€™s always more than 1$ of non-OP reward for each OP reward thatā€™s distributed.

On top of the incentives, should the proposal be successful, we propose to facilitate the adoption of OP on Angle protocol and facilitate the introduction of OP as a collateral to mint agEUR.
Angle low interest rates (0.5%) would be the smallest ones possible for people to borrow against OP.

This will allow among other things OP holders to mint stablecoins against their OP (rather than having to sell it) or to get leverage on their tokens (using the agEUR-OP liquidity we would be building).

3 Likes
12

If it was just deployed on optimism. Iā€™d recommend coming back in a couple weeks to see the usage of the protocol.

There are some great incentives here, and we appreciate that you have utilized the community feedback to adjust your OP request, but we believe itā€™s better to apply once the protocol has been alive for a while.

13

Definitely, will do then and thanks for your reply! Also might work well in terms of timing since next round will only start on the 8th of September.
TVL at the moment is $900k on Optimism by the way.

14

It will be a good idea for the Angle Protocol to re-apply a proposal in voting cycle #6, the Angle Protocol is launched on Optimism, (in that term mentioned in this proposal),

the governance funding is aimed at incentivizing projects launched on Optimism, and such incentivization would contribute to the growth of Angle as well as the growth of the Optimism ecosystem.

1 Like
15

Definitely support this! Love CDPs and Angle is a + for the Optimism community

If they get an OP grant, we can also partner with MAI to make a bigger splash on liquidity capture

1 Like
16

Thanks for the support @Benjamin.lens !

We are coming back for voting cycle #6 now that Angle has been deployed on Optimism!

The app can be used here to borrow agEUR against OP, USDC, and wETH.

You can also check out the analytics (by selecting Optimism on the top right corner), and all the contracts deployed on the rollup.

There are potentially some interesting partnerships coming with Angle on Optimism with Gamma, QiDao (MAI), and Liquity (LUSD).

Let us know if you think the proposal is ready to move to voting for Cycle#6!
@Bobbay_StableLab @OPUser @diligit

Ps: I created a dedicated thread on the new Discord channel.

3 Likes
17

Hi @tuta Thank you for the tag.

Few things:-

  1. change the proposal template to latest one.
  2. in the new template summarize the feedback you have got so far.
  3. once new season starts, first week is for community feedback so I assume we will see more engagement here from the community. At the end of first week, summarize all the feedback again on the proposal for delegate/committee feedback in second week.

Please find more on the new process here

18

Exciting! USDC is cool and all, but what about minting agEUR with MAI :star: :eyes:

1 Like
19

Thank you for the input!

I just updated the proposal, and added DeFi Committee Group C as reviewers.

If understood correctly, schedule should be as follows:

  • Community feedback until September 15th
  • Delegate feedback until September 22nd.
  • Voting until September 28th.
1 Like
20

FWIW: Angle Protocolā€™s to acquisition and max locking veVELO (4y) demonstrates to me that they are making a long term bet on the Optimism ecosystem and that this isnā€™t just about a short term liquidity boost.

2 Likes