Summary
I am requesting FUSE funds to incentivize community participation in a newly developed StableSwap pool on Fuse. The funds will be used to
- Reward liquidity providers for the DAI<>USDC<>USDT pool on fuse
- Pay out bug bounties for any security vulnerabilities discovered within the StableSwap pool(s).
The final deliverable will be a pool deployer, trade router, and web interface for users to interact with the pool. Fuse stable swap is intended to become a public good for the fuse ecosystem, so once it is finalized, a plan will be devised to hand over possession of the codebase to FuseFi, with the end goal being integration with the FuseFi app.
Rationale
StableSwap pools are a common DeFi primitive popularized by Curve.Finance. They allow for efficient swaps between assets which should track the same value, such as DAI and USDC, which are both worth roughly 1 USD. Currently the only decentralized swapping mechanism on Fuse is FuseSwap. By implementing StableSwap, Fuse users can achieve better rates in swaps between different stablecoins, and LP providers can get returns with lower risk of impermanent loss.
As the usage of bridges across chains grows, as well as the invention of new DeFi primitives such as interest-bearing tokens or staking tokens, we will see increased need to swap between assets of similar kind. For example, it may be useful to swap between Bridge A’s version of USDC and Bridge B’s version of USDC, or perhaps to Ola Finance’s interest-bearing oUSDC token.
StableSwap pools are an essential DeFi primitive. At time of writing, Curve.finance has a TVL of over $10 billion USD. This illustrates the popularity of such a primitive, as well as the great risk incurred by creating such a pool. The funds requested here will be devoted towards increasing the security of the Stableswap protocol.
The funds requested here will go towards incentivizing community testing (through use) of the StableSwap implementation on the Fuse network. This will serve to increase awareness to help bootstrap liquidity and network traffic, as well as to incentivize the discovery of any bugs early on.
Objectives
The objective of this grant proposal is to bring attention to the first pool (between DAI, USDC, and USDT) and get users interacting with it. DeFi protocols become more secure as there are more eyes on them. By incentivising users to interact with the pool and report bugs, we can strengthen the protocol before and after it begins managing real funds. Plus, we can increase the value proposition of using FUSE!
Deliverables
- A pool between DAI, USDC, and USDT already exists. More information can be found here. This pool includes a RainMaker-style rewards disbursement mechanism, so once grant funds are allocated, they can be simply and trustlessly distributed.
- Documentation! All about how Fuse-StableSwap works
- A procedure for the community to launch new pools safely and trustlessly
- A procedure for the community to take over ownership of Fuse Stable Swap for use in FuseFi
Budget:
- 80,000 FUSE
- 30,000 FUSE to be distributed over the course of 30 days, proportionally to depositors in the pool.
- 50,000 FUSE to be reserved as a bug bounty for the StableSwap pools. Bug reports will be assessed on an individual basis. Rewards for bugs are as follows:
- High severity: 10,000 FUSE - High severity bugs represent a likely or very likely impact to the protocol which may render it completely broken, or may cause severe loss of funds
- Medium severity: 5,000 FUSE - Medium severity bugs represent unlikely bugs which may have severe impact, or likely bugs with moderate/low impact to protocol usability or user funds.
- Low severity: 1,000 FUSE - Low severity bugs represent unlikely bugs which may have a low impact on protocol usability or user funds.
Contributors
- Eric DeCourcy (2+ years solidity smart contract experience)
- Alanna Larson (frontend design and javascript experience)