[AIP-8] Increase AUSD utility by providing access to high-leveraged AVs

Background:

In March, we announced multiple improvements to AUSD including a move of the AUSD liquidity pool to Ellipsis and an allocation of dev fund to AUSD peg insurance.

We now would like to propose adding AUSD as another mechanism for access to high-leveraged Automated Vault.

Rationale:

By granting access to high-leveraged Automated Vaults to AUSD holders, we will increase its utility and demand for holding AUSD, which would help support the AUSD peg and its adoption.

Proposed Implementation

The implementation will follow a similar pattern as xALPACA, with the following details:
(Please note that this proposal will provide an additional method for accessing high-leveraged AVs. xALPACA holders will continue to receive access as per AIP-6 resolution.)

Locked tokens: users will need to stake Ellipsis’s AUSD3EPS LP token for access to high-leveraged AVs. This option will provide the highest capital efficiency for our users as they will continue to earn yields from trading fees. The locked LP tokens will also be staked in the FairLaunch contract on users’ behalf to continue receiving ALPACA rewards

Staked duration: user can choose the lock duration between 1 - 52 weeks. Similar to Governance vault, the longer the duration, the higher allocation they will receive.

Allocation: We propose a similar structure to xALPACA where $x worth of LP tokens locked for 1 year to receive $1 dollar of allocation in the high-leveraged AVs. The community will vote on what the $x should be.

Other implementation notes:

  • Since users can add any combination of tokens in the AUSD3EPS LP token, we will limit the total AUSD that can be borrowed if the price falls below a pre-determined threshold. This would force users who want access to either add other stablecoins in the pool (e.g., BUSD, USDT, etc.) or purchase AUSD from open market to add to the pool. Both of these actions would help increase AUSD price to the peg.

Voting:

For absolute clarity and fairness, we will do a series of two votes for this AIP.

First Vote: To determine if we should extend the access to high-leverage vaults to AUSD3EPS LP token holders. This will be a simple YES or NO vote.

Second Vote: If the first vote passes, we will then have a second vote to determine the parameters for limiting access to the vaults.

The implementation will follow the same pattern to the xALPACA holder:

  • Allocation will be across all high-leverage vaults
  • Linear Allocation
  • Dynamics ratio, adjusted on a monthly basis at the beginning of each month. To prevent manipulation, we will use TWAP of AUSD3EPS for the 1 week prior to the ratio adjustment.

Voting will be on setting the AUSD3EPS allocation ratio only .

Option1: $1.0 worth of AUSD3EPS locked for $1 allocation (same as xALPACA)

Option2: $1.5 worth of AUSD3EPS locked for $1 allocation

Option3: $2.0 worth of AUSD3EPS locked for $1 allocation

Option4: $2.5 worth of AUSD3EPS locked for $1 allocation

Option5: $3.0 worth of AUSD3EPS locked for $1 allocation.

Option6. $3.5 worth of AUSD3EPS locked for $1 allocation.

Option7. $4.0 worth of AUSD3EPS locked for $1 allocation.

Edit note: Updated voting options to reflect the final choices

7 Likes

The options should say AUSD3EPS if Im correct. Anyway I don’t agree with the options IMO it should be:

Option0: $5.0 worth of AUSD3EPS locked for $1 allocation

Option1: $7.5 worth of AUSD3EPS locked for $1 allocation

Option2 $10.0 worth of AUSD3EPS locked for $1 allocation

Option3: $12.5 worth of AUSD3EPS locked for $1 allocation

Option4: $15.0 worth of AUSD3EPS locked for $1 allocation

Option5: $17.5 worth of AUSD3EPS locked for $1 allocation

Option6: $20.0 worth of AUSD3EPS locked for $1 allocation.

AUSD it just way less risky than Alpaca.

It doesn’t make sense for a investor to allocate 5 times the capital or more
Here you need to LOCK your dollars for 5% return and earn 80% in the automated vault (with impermanent loss possible)
So you get around 20%-25% return but you have to LOCK your capital
Such investor will just move to Bancor or any other protocol and get a 10-20% return in any stable with no lock periods and no impermanent loss.
I see no point in doing it so high.
Up until option 3 (2.0 per $ allocation) should be OK, anything over that makes no sense and will not be used.

You forget the 3x vaults are still accessible for those people who don’t want to lock their capital. The 8x vaults should be exclusive.
Current APY for AUSD3EPS is 15% so I don’t know where you get that 5% from.
Currently there is 5M AUSD this means with 8x leverage all 8x vaults can be filled by only the AUSD users.

The thing is that return is locked, most people that invest in stables pools want to get them any time that they want (like a savings account), so it need to be liquid…
And it is paying well because it has low TVL, if it has higher TVL it will go down significantly
So around 5% that every other stable around the web is doing is reasonable

This goes the same for Bancor.

If you want it to be liquid the 3x vaults are still available for you…

If the allocation is 2 to 1 or something in that range this proposal is just useless for AUSD, it will not bring more users to UASD and no extra AUSD will be minted.


Btw this is the image of AUSD peg
It is still really volatile, no investor wants to risk that much locked.
I do believe in AUSD but it just don’t have enough TVL to be usable as a stablecoin yet.

I agree on that, but having a 2 to 1 ratio results in no AUSD being minted (or maybe like 1M, which is trivial). The peg is insured by Alpaca AUSD Price Stability Module - Alpaca Finance

You are correct. It’s a typo. I fixed it.

Just want to point out that this graph is based on PancakeSwap’s pool. Since we have moved the incentive over to Ellipsis, all the liquidity has now migrated away from it. The volatility you see is a function of low liquidity in the PCS pool.

The first vote for this AIP will be up on Snapshot for voting on Monday.

1 Like

The first vote for this AIP is now live on Snapshot.

You have until 11:59PM UTC Friday, June 10th to vote.

Vote now: Snapshot

I would like to propose dismissing all limit on AV access.

How can I propose on snapshot?

we just voted to add the limit to AVs with xAlpaca, why should we immediately do another vote to cancel the last vote?

I am not saying we should, just “I would like” lol.

Nice argument. If you would like to change this you need to come up with compelling arguments and convince people that your view is superior. After that buy all the Alpaca you can, lock it into the governance vault and ask for an snapshot to be taken.

Like @Bibendus said we just voted for this… wait a few months and try again (with compelling arguments to dismiss it of course).

1 Like

Excuse me if this question seems dumb, but what is the whole purpose of Alpaca having a stablecoin?

I do not believe this is the best way for AUSD to stay at peg.

Instead, what if we allocated a portion of revenue to the AUSD stable swap? I believe just the announcement of this will encourage speculators to buy up AUSD towards peg, then arbitrageurs can then utilize this function to ensure AUSD remains at peg over the long run.

Even if there is not enough revenue to sustain this at the start, it will cause a constant buy pressure on AUSD at the 0.998 price point. Over time as some people may close their AUSD positions (which involves paying back their AUSD debt), I believe this will become more and more sustainable.

Once this is achieved and AUSD can successfully sustain a price between 0.998 to 1.000, we can begin the next stages of pushing more AUSD trading pairs. I suggest partnering with a smaller DEX like BSW to give a pool to main AUSD pairs (like BNB, ETH, BTC, BUSD and Alpaca etc.)

I might even suggest a launch pad where Alpaca Finance helps conduct the IDO, sell discounted tokens to xAlpaca holders, convert the funds raised from BUSD to AUSD, and provide a trading pair on BSW (I like BSW over PCS) with AUSD as the base asset.

Welcome to the forum :star_struck: It’s one of the products of course the big one is leverage yield farming, but they plan on improving AUSD. The great use case for me is to provide the never sell strategy. Let say you have a bunch of BNB but you need cash (USD) for bills or something you want to buy. You can either sell the BNB for BUSD and lose market exposure or mint AUSD with it and still have the exposure to potential upside of the market. Cherry on the top is you earn yields on your loan :smiley:.

it would be better if they gave the opportunity to mint ausd as a pledge of alpaca