Aave

Author: Angle Core Team Forum Post: https://governance.aave.com/t/listing-proposal-add-ageur-on-aave-v3-on-polygon/7325

Summary

The purpose of this AIP is to list agEUR, Angle Protocol’s decentralized Euro, on Aave V3 when it deploys on Polygon.

Angle Protocol is a decentralized stablecoin protocol designed to be both over-collateralized and capital-efficient.
The protocol has started by launching agEUR, a Euro stablecoin in November. This stablecoin has become one of the biggest in the market with a supply of 129m, a TVL in the protocol > $225m, and an average daily volume > $4m.

agEUR can at the moment only be issued on Ethereum mainnet, but it can be bridged on many different chains, like on Polygon with the PoS bridge.

So far, there are more than 8m agEUR on Polygon with deep liquidity on Quickswap ($14m liquidity) and on Curve (~$2.5m).
Besides Quickswap and Curve on Polygon, on mainnet agEUR has liquidity pools on UniswapV3 ($48m liquidity for agEUR/USDC), Sushiswap ($11m for agEUR/ANGLE) and Curve ($130m). The stablecoin can be minted in a capital-efficient way at oracle value from the protocol meaning liquidity for it could be theorically infinite.

Stablecoin is also available on Fantom, Harmony, BSC, Avalanche, Solana, NEAR, Aurora and Fuse.

The stablecoin is over-collateralized (current collateral ratio = 155%), it is backed by USDC, DAI, FEI and FRAX. The protocol insures itself against the $/€ change risk by issuing perpetual futures and by the deposits of another type of agent incentivized by the strategies built by the protocol (involving lending to Aave).

Links & References

• Docs
• Token Contracts: All Angle related contract addresses can be found here
• Smart contracts/Code
• Analytics

agEUR has no Chainlink feed yet but it passes all the security requirements to get eligible to a feed. If this Snapshot vote is positive, then the Chainlink team could setup this oracle pretty rapidly.

Security Considerations and Risk Analysis

Angle has had three different audits by Chainsecurity and Sigma Prime which can be found here. It also has a $500k bug bounty on Immunefi.

Angle Protocol is a decentralized stablecoin protocol, it is ruled by the ANGLE token and more generally by the veANGLE token (which went live in January)

Votes by veANGLE holders are implemented by a 4/6 multisig composed of 3 core team members (Guillaume Nervo, Picodes, Pablo Veyrat), Julien Bouteloup, 0xMaki and SebVentures.

agEUR token contract on mainnet is upgradeable and can be upgraded by the multisig described above. Only protocol related contracts have minting rights on this contract, and so there’s no multisig or EOA that can directly mint agEUR at the moment. agEUR on Polygon can also be upgraded by a multisig on Polygon. Only Polygon PoS has the minting right on the contract.

agEUR has been assessed by Curve Team, report is available here

Benefits for Aave V3

agEUR could be an interesting asset for Aave V3 efficiency modes: for instance if there is an efficiency mode with other Euro stablecoins, we could imagine people taking advantage of Aave V3 to get significant leverage and to arb the stablecoin back to peg (leveraging Curve and potentially Quickswap as well).

Angle community could even push for shifting incentives from Quickswap to UniV3 on Polygon to allow for better arbs leveraging Aave.

agEUR could also be another asset in Aave’s Polygon efficiency mode for stablecoins in general allowing for interesting FX arbs here as well.

On top of that, in the first place agEUR could be used in isolation mode which means this asset would induce very small risk for the Aave protocol as a whole.

As for the overall benefit of agEUR for the Aave community, many agEUR holders are looking for a reliable place to deposit their stablecoins and get a simple yield on this. Aave would provide this use case.
More generally, many DeFi farmers are coming from Europe and want to get a yield on their home currency without being exposed to a USD/EUR change risk. Listing agEUR on Aave would open the gates for many institutional players coming to get yield on their €.

Besides arbitrageurs, we could expect borrowers of agEUR to be people wanting to either take advantage of the different yield opportunities provided by LPing agEUR or by people wanting to get leveraged on another asset while being exposed to the € price of it (and not the $).

Risk Parameters

With the liquidity on Polygon in mind, the following parameters are proposed:

1. V3 Efficiency mode EUR stablecoins (if it exists): 97% LTV, 98% liquidation threshold, 10% reserve factor
2. V3 Efficiency mode stablecoins: 90% LTV, 95% Liquidation threshold, 10% reserve factor
3. V3 Isolation mode: 60% LTV, 80% liquidation threshold, 20% reserve factor, 5M$ debt ceiling

Protocol Data

Market Data

• Market Cap: $145m, ($8.7m on Polygon)
• 24h volume: typically ranges between $2-$20m

Social Channels

• Twitter: 25.9k
• Discord: 31.2k

Contracts date of deployments, number of transactions, number of holders for tokens:

On mainnet:

• Date of Deployment: Oct 23rd 2021
• Number of Transactions: 2347 and 15614 transfers
• Number of holders for token: 489 (NB: there are many incentive programs involving LPs of agEUR which means actual amount of holders is higher)

On Polygon:

• Date of Deployment: Nov 23rd 2021
• Number of Transactions: 683and 5976 transfers
• Number of holders for token: 162

Voting Options

YES - deploy AAVE V3 on Polygon with agEUR listed NO - do not list agEUR on AAVE V3