BeethovenX

Summary

Use a portion of DAO Treasury ETH to farm a position in Gyroscope’s Elliptical Concentrated Liquidity Pool (E-CLP) for wETH-wstETH on Beethoven-X/Balancer Optimism.

Proposal

This proposal would grant Music Directors the ability to move treasury assets to Gyroscope E-CLPs on Optimism, being a new protocol for Treasury assets. Governance approval is required prior to Treasury funds being deposited with a new protocol.

The proposal also includes a first action of moving 53 ETH (~$100k) of the DAO Treasury ETH to the Gyroscope E-CLP wETH-wsETH position on Optimism, and staking the resulting BPT on Aura Finance in order to gain boosted BAL, and AURA emissions. Staking the E-CLP BPT on Aura Finance would only be done if the separate governance proposal to allow farming on Aura is approved.

This amount would not count towards the existing $200k monthly discretionary treasury asset reallocation limit, but any further deposits to Gyroscope E-CLPs would be subject to that limit unless otherwise approved by governance.

Motivations

This proposal is part of a series of BIPs aiming to get our Treasury assets back to earning following the removal of Multichain bridged assets from Fantom in early June.

Granting the ability to deposit DAO Treasury assets within Gyroscope E-CLPs on Optimism allows for an additional source of trading fee earnings as well as BAL/AURA emissions via farming on Beethoven-X and Aura (pending other BIP enabling farming there). The proposed asset movement would aid synergies with Treasury veBAL/vlAURA at times when gauge voting power is directed towards the wstETH/wETH E-CLP. It also demonstrates support for protocols building on Balancer/Beethoven-X and may contribute to a stronger business relationship with Gyroscope.

Impacts/Risk Assessment

Moving Treasury assets as proposed introduces an added layer of smart contract risk specific to Gyroscope’s E-CLP technology. Gyroscope underwent auditing by Nethermind and Trail of Bits in August and September of 2022, but it is a relatively new protocol having been testing live since November 2022 with gradual ramp up to current TVL of $3.0M (as per Gyroscope website). Gyroscope smart contacts have recently undergone a further external security audit but the report of this is yet to be published. The relative newness of E-CLPs could be considered to entail a higher risk profile than more battle-tested pool architecture technologies.

This proposal also entails taking on smart contract, organizational, and market risks of holding and LPing Lido’s wstETH. Lido currently secures upwards of $14B as stETH/wstETH, has a $2M bug bounty program, and has undergone multiple rounds of security auditing. stETH has been traded for more than 30 months and has a track record of tight peg to ETH over the long-term.

Specification/Execution Plan

If this proposal passes, MDs would have the ability to deposit DAO Treasury funds within Gyroscope E-CLPs on Balancer/Beethoven-X Optimism.

53 (~$100,000) DAO Treasury wETH would be bridged from Ethereum and used to form a Gyrosocpe ECLP wETH-wsETH BPT on Beethoven-X/Balancer Optimism. If the separate governance proposal to allow deposits with Aura Finance is passed, then the wETH-wstETH BPTs will be staked on Aura finance to earn boosted BAL as well as AURA emissions.

All movements of wETH and BPTs would be within or between the DAO Treasury addresses on Ethereum [0xea06e1b4259730724885a39ce3ca670efb020e26] and Optimism [0xea06e1b4259730724885a39ce3ca670efb020e26].

Some relevant Links

wstETH-wETH Gyro E-CLP page - https://op.beets.fi/pool/0x7ca75bdea9dede97f8b13c6641b768650cb837820002000000000000000000d5 Gyroscope Finance webpage - https://gyro.finance/ Gyroscope docs/ audit reports - https://docs.gyro.finance/gyroscope-protocol/audit-reports