Euler Finance

Introduction

Hello! I’m Solarcurve and I’m part of a group called the Balancer Maxis who currently lead partnership integrations for the Balancer Protocol. I believe Euler is a prime candidate to take advantage of Balancer’s boosted pool technology. A boosted pool means most of a liquidity pool’s assets are sent off to earn extra yield for liquidity providers - in this case, deposited to Euler.

Our flagship Aave boosted stable pool has been live for nearly a year and has ~$120M TVL. It only has a boosted yield of 0.95% because the deposit rates on Aave are fairly low. Euler has significantly higher deposit rates which will help attract even more TVL. As TVL increases in a boosted pool the boosted yield goes UP because a higher percentage of the pool’s assets will be deposited to Euler. Only a certain amount of tokens need to remain available for trading, perhaps 500k - 1.5M.

Motivation

The Euler community has recently begun to consider incentivizing the lending side to increase TVL and further decentralize the distribution of EUL. I’d like to suggest using EUL to incentivize voters (“bribe”) to direct BAL & AURA emissions towards a Euler boosted pool instead. Why is this better than simply having lenders earn EUL directly?

• The ROI for voter incentives is consistently around 2:1 in the last couple of months. You get $2 of BAL & AURA emissions for every $1 of EUL spent
• Balancer will return earned protocol fees as additional voting incentives. This means even after you stop spending EUL your pool(s) will continue to see emissions directed towards them.

Balancer applies our 50% protocol fee to swaps and yield. With Euler’s high deposit APR’s your pool would likely generate significantly more protocol fees than our Aave boosted stable pool. These earned protocol fees being returned as additional voting incentives into the 2:1 ROI mentioned above will help create a strong tailwind to growing the pool’s TVL.

Specification

In terms of what’s required to make this a reality, Balancer is finishing development of generalized boosted pool support on our UI later this month. We also need to create the underlying boosted pool infrastructure to support Euler which is fairly simple to do and can be completed in less than a week. Note that if we need to account for staking the deposited Euler assets into another staking contract to earn EUL this could increase development time & effort significantly.

Beyond that, some amount of EUL should be allocated weekly to bribe on Aura’s Hidden Hand market (better efficiency than Balancer’s). For comparison’s sake Rocket Pool has been allocating ~3.2k RPL every two weeks which is ~$68k in the most recent round. Balancer added an additional ~$30k on top from earned protocol fees. The rETH/weth pool has a total yield on Aura of ~9% APR with $63M TVL. The Aave boosted stable pool as an APR of ~4.1% on Aura. It’s likely a Euler boosted stable pool would land in a similar APR range.

Summary

I propose the creation of a Euler boosted USDC/DAI/USDT pool that is allocated 5,000 EUL as voting incentives every two weeks. This would run for a trial period of three months, after which the results can be evaluated by the Euler community and an extension can be considered. Tentative start date would be early December.

Total spend: 30,000 EUL