Summary: Seek approval from the community on launching Curve v2 OHM-paired crypto pools, starting with OHM-ETH.
Motivation: Curve is now releasing general access to crypto (v2 or dynamic peg) pools as described in the white paper from last summer. The new Curve Factory has been deployed, and anyone can create new crypto factory pools.
Curve is by far the biggest DEX (decentralized exchange) if going by total value locked on the platform, with over $23B at the time of writing. One of the guiding principles for Olympus liquidity management is to integrate OHM across the Defi landscape, and make sure that OHM liquidity is available where there is potential for significant demand and trade volumes.
Curve is largely targeting institutions, protocols and other large token holders, where liquidity depth matters. Curve has also adopted a cross chain strategy and is now available on a range of networks. With the launch of Crypto pools it seems that Curve will compete head on with other DEXes as a one stop shop for token swaps.
In the fall of 2021, Olympus started accumulating CVX tokens as a way to boost and earn rewards from the Curve ecosystem. By boosting OHM pools on Curve, Olympus is able to generate extra rewards from the OHM pools - thereby quickly turning these pools into a significant revenue source.
In the Olympus policy framework it is stated that new liquidity pairs need a community vote, but launching existing pairs on new networks and rollups does not. Technically, no new liquidity pairs will be launched, but Curve is a new platform and we seek your comments.
A proposed launch plan would be to focus on one pair, to be able to focus CVX voting power on one pool and understand the dynamics of pool settings and rewards from pool depth. The proposal is to focus on a deep OHM-ETH pool. Focusing on one pair will allow deeper liquidity, more rewards and hopefully better routing. Current prices and rewards should allow for around $2M in monthly rewards when using Olympus treasury CVX to boost the OHM-ETH pool.
Risk Evaluation: Curve is the largest DEX (by TVL) and is one of the most battle tested platforms in Defi. The first Curve v2 pool, Tricrypto, was launched on June 9, 2021 and currently holds around $900M in TVL. Since then, 8 more crypto pools have been launched. However, a public launch of Curve v2 will require new smart contracts (like the new Factory) that are not as battle tested. Olympus is now at a size and level of progress where risk cannot be avoided, but risk and growth should be balanced.
A proposed strategy would be to gradually deploy capital to Curve v2 when it is possible. This will be done either through bonding LP tokens, migration of current liquidity or the creation of LP through treasury reserves. The capital deployment would be gradual, starting with $10M, then potentially another $10M after analyzing trade volume and rewards.
Request for Comment: https://forum.olympusdao.finance/d/1070-request-for-comment-curve-v2-pool-deployment/22