Launch of EURC pools on Stargate

New Pools
1

Introduction

This proposal seeks approval from the Stargate DAO to establish an EURC pool on Ethereum, Base and Avalanche.

Motivation

EURC is a Euro-backed stablecoin, that is MiCA-compliant and issued by Circle. It is 100% backed by the Euro with Euro-reserves transparently held at regulated financial institutions.

Increased demand for the EURC is shown by its parabolic increase in supply, from under $50m 9 months ago to over $230m currently. Demand for it in DeFi has also given rise to Aave allowing its users to borrow or use EURC as collateral. Today, however, there is no good way to bridge EURC across these chains.

Stargate already has a close relationship with Circle, helping to expand to longer tail chains via the USDC.e (bridged USDC), allowing these chains to receive a canonical and native-backed stablecoin to bootstrap their ecosystem. Stargate should continue to progress this with EURC by having EURC pools launched on top of Stargate with the possibility of EURC.e as a Hydra asset for HydraChains.

Proposal

Stargate should launch small pools with the aim of €2m per chain with the help of incentives to facilitate the bridging of EURC across chains. This allows Stargate to gain a strong foothold in the EURC cross-chain flows.

Incentives will be paid by ecosystem teams, sufficient to incentivise the target amount of liquidity for 6 months. After which, the pools are ideally self-sufficient due to Hydra, or the DAO can call on incentivising the pools with $STG.

EURC should become a Hydra asset, allowing pre-existing and new ecosystems to have access to EURC.e.

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Could you help clarify how the incentive will work? Is it specifically intended for providing liquidity directly to Stargate?

Excluding it is fine, but could you help explain how excluding it from the fee distribution would support liquidity growth?

On fees, how much will we be charging? Will we be exploring reducing the fee to increase adoption, possibly we can work on a deal with ecosystem team to subsidize Stargate with supporting the pathways.

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Similar to when Stargate had its farms, incentives provided by ecosystem teams will paid out to LPs via Stargate farms. yes it is specifically intended to rent capital from external LPs

Fees are generated in the delta of the bridging asset. Example, bridging 1 eth from mainnet to arbitrum, 1 eth goes in and 0.999 is sent to the user on Arbitrum. The 0.001 ETH is the fee the protocol earns and typically remains in Stargates pools. Hence, removing that 50% fee share with veSTG allows all fees in EURC go into beefing up the EURC pools for free (incentives are not being paid for this capital)

Fees we charge will work the same way as how we currently charge, using the AI planning module’s dynamic fee structure to price that route against competitors. Exploring reducing the fee via rebates is something we can work on with the ecosystem teams but I think its dependent on them to rebate users.

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I have concerns about this clause for a couple reasons:

  1. this is exactly the kind of fee and income that is supposed to be distributed per the recently passed dao vote. if it’s felt that strategically the dao should have more eurc in its holdings, it’s as simple as buying eurc with another asset that is currently being held by the dao, rather than doing away with the profit distributions as passed by the dao a couple weeks ago

  2. I think that it could set a precedent where, if passed with this exclusion, we see all or many future proposals by the foundation come in with this “pork” that goes against what the dao has decided in regards to 50/50 distributions

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Agreed completely, if such exclusions will be in the proposal for vote then my vote No, although otherwise I support the idea fully.

Yes for EURC pools, NO for exclusion of fees to the stakers.

Of course that will cost the veSTG holders something anyway {slight selling pressure of STG as rewards for EURC pools}, but I believe most veSTG holders definitely prefer that to the idea that we will be breaking the rules of how fees are distributed here or there, or ever at all.

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  1. The idea of this was to help grow the liquidity in the pool without having to activate the treasury funds. From our conversations with the relevant teams there are now other ways that we could explore to help deepen liquidity if EURC bridging does take off.

  2. There was no intention here and we’re happy to remove this clause.

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I agree with you. Very interesting idea.

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