SIP-X Add Vesper Earn FRAX - D4pool Metapool on Mainnet

Summary

This is a proposal to launch a Vesper Earn “wrapped FRAX” metapool with Saddle D4pool (FRAX, FEI, LUSD, ALUSD) to offer a first-of-its-kind yield farming stablecoin AMM.

Background

Vesper Finance is a DeFi super app that makes DeFi more accessible and easier to use. It offers well-audited products that simplify digital asset growth and deliver new opportunities for exposure to emerging DeFi projects and communities. The platform’s native token, VSP, incentivizes participation, facilitates governance and catalyzes user contribution.

Vesper Earn is a DeFi yield aggregation product that converts yield earned into a different output asset for the depositor. When users deposit to a Vesper Earn pool, they receive a pool share token that tracks their share of the pool’s total deposits. Because all yield is converted and distributed, this pool share token always reflects a 1:1 redemption with the deposit token.

For example, a user can deposit DAI to receive veDAI-ETH which entitles them to collect ETH as the deposited DAI earns yield.

In essence, Vesper Earn exists as a yield bearing wrapper for the pertinent deposit token.

Motivation

This proposal outlines a D4pool metapool for a Vesper Earn FRAX pool that pays out in Saddle D4pool. In other words this metapool will be comprised of veFRAX and Saddle D4pool LP tokens.

The Saddle AMM contract holding the veFRAX and D4pool will generate additional D4pool from the wrapped FRAX.

This means that the 50% of TVL represented by veFRAX is earning APY through Vesper. That yield is converted to D4pool to be claimed by the AMM contract itself. The claim function is public, anyone can claim on behalf of AMM, and when that happens, the additional D4pool from earned yield is injected directly into the AMM.

The veFRAX token can always be deposited and withdrawn 1:1 for FRAX. LPs benefit from yield earned on their deposits in addition to trading fees and liquidity incentives.

Capital efficiency is the name of the game in AMMs, and enabling LPs to earn yield passively in addition to other incentives guarantees that the realized APY will retain an appropriate rate even if TVL vastly outpaces trading activity.

Additionally, the mechanism through which rewards are distributed creates trading volume via arbitrage, as each yield claim adds only D4pool to the metapool, making the price of the wrapped FRAX increase above $1. So arbitrageurs will profit while simultaneously maintaining the peg and increasing trading volume to this Saddle pool.

Specification

Vesper to create a new Earn pool of deposit FRAX, earn Saddle D4pool token.

Saddle to create a new metapool for Vesper Earn FRAX via 4pool.

Two months liquidity program to start:

  • 10k SDL/month
  • 1k VSP/month

References:

Vesper Earn documentation: https://docs.vesper.finance/vesper-earn

Vesper App: https://app.vesper.finance/

For: Authorize an incentivized Vesper Earn “wrapped FRAX” metapool

Against: Do nothing

Poll:

  • For
  • Against

0 voters

2 Likes

Hey Greenjeff ! Thanks for taking the initiative to throw up a proposal. Just a friendly reminder that you have to manually add the poll to the proposal with the text editor :pray:

1 Like

Added the poll in for Jeff

2 Likes

Thanks for getting me fixed up guys. Really excited to unlock this new primitive with Saddle

2 Likes

Hey greenjeff, its been 4 days since you posted, feel free to shut down the vote and we can get it sent to snapshot !

1 Like