May 17, 2023: Swell Network 🌊🐸
New governance votes for Swell $swETH, Reserve’s $hyUSD, $ALCX-$CRV + more
Busy week in governance with several important votes. Please note, none of the projects seeking gauge votes have yet received a full write-up from the Llama Risks team to our knowledge, so our default position is to recommend voting against the projects until they’ve taken this step.
$hyUSD (Reserve Protocol)
The Reserves have arrived! Reserve is a protocol which gives anybody the power to launch their own stablecoin infrastructure. They also have ample flywheel assets they use to help bootstrap liquidity.
$hyUSD is one of the newest stablecoins, standing for “High Yield” USD. The intent is for the token to beat inflation with 8% yield rates, and be fully backed by other yield bearing USD sources.
The team operates transparency pages on all their rTokens allowing users to easily see the composition. Here is the current snapshot of $hyUSD.
About a quarter of the backing is tokens from Flux Finance, so you may want to familiarize yourself with the protocol. User “Tom Sawyer” wrote a good piece on Flux Finance recently:
We had the opportunity to talk about this with Thomas Mattimore on our last Llama Party:
More links
Swell ETH
This one confused us a bit at first… in other places Stakewise ETH uses $rETH as their symbol, but this more commonly is associated with Rocket Pool. As a result, sometimes people refer to Stakewise’s token as $swETH. Except now Swell ETH joins the party and claims $swETH for itself, so we’re giving up any hope of keeping these abbreviations nice and tidy.
Anyhow, let’s just agree to suspend disbelief and enjoy the ride.
Swell reports themselves as a new entrant in the expanding LSD/LUST wars. They have about 10,000 ETH staked and estimate yields of 6.5%.
What sets them apart from other ETH wrappers?
I was a bit confused on the zero fees aspect — how does the protocol make money? Diving into the docs it describes that this will be a promotional offer, fees will eventually be set to 5%.
A potential concern for votes might be the premature state of the project. They have received an audit, but at the moment admit to being very centralized (with intent to decentralize down the line on token launch).
Another point of confusion is that their forum post claims they do not rely on oracles, but they also issued a press release announcing they use Chainlink to monitor proof of reserves. We presume the discrepancy is because they consider this to be a backup system and not a key piece of the infrastructure that relies on oracles.
None of these peccadilloes give any indication the team is malicious, it’s all indicative of an early stage project scrambling fast to get off the ground. Their blog captures their breakneck pace of innovation, and the team certainly is hard at work.
Airdrop hunters may want to keep an eye on the protocol. Since they have announced a token but haven’t announced plans, there is some airdrop potential here — they advice keeping an eye on their forum for details. (Not financial advice, of course)
They are pairing their $swETH token against $frxETH for their Curve pool to take part in their incentives program:
Note also the Curve pool has not yet been seeded.
ALCCRV
Per the IPFS description:
{"text":"Well suited and only combination of ALCX and CRV"}It turns out to be true, there is a single pool with both Alchemix’s $ALCX and Curve’s $CRV. We haven’t seen many other pools paired against $CRV, so it is interesting on this front alone.
Liquidity is thin at the moment, but such is the purpose of the gauge. They don’t have a forum post up, but Alchemix is very well known around the ecosystem with several other gauges and no issues to date, so we imagine this sails through governance with little issue.
We had the opportunity to llama party it up with Alchemix founder Scupy Trooples two months back if you are interested in learning more about the ecosystem:
Replace Implementations
A housekeeping vote — Curve is upgrading several implementations to allow for EMA oracles. For a little bit of background, implementations are basically like template contracts deployed on-chain. Curve factories grab the implementation contracts when deploying new pools. Occasionally Curve replaces these implementation contracts with newer versions.
Keeping these up to date requires juggling a lot of meticulous details. A prior upgrade vote set older implementation addresses to the zero address, which prevented some types of pools from launching. This vote corrects the error, reverting the implementation addresses.
This vote we certainly recommend — there’s a small chance this vote is also in error, but so is the last one so we’ve really got nothing to lose.
stETH collateral
Along the same lines, a vote tossed up at time of publication for a next generation stETH pool
{"text":"Add a gauge for the following pool: stETH-ng. This is a stETH/ETH pool with EMA price oracle: needed for crvUSD to use wstETH collateral"}This would appear to be the next step to onboarding stETH as a collateral type for $crvUSD, something of great interest to the community.