Authors: 0xAstolfo (Vesta) and 0xLamentations (Aura)
Summary
Balancer’s Arbitrum deployment has become a key venue for both VSTA and VST liquidity. Liquidity for these pools, however, can be improved for both tokens to improve the user experience and utility of Vesta. This proposal outlines the use of Aura Finance, a meta governance aggregator for Balancer, to boost liquidity and provide a long-term revenue stream for Vesta DAO via voting incentives and staking protocol-owned BAL exposure.
Background
Aura is a meta governance protocol, focusing on optimizing incentives for “ve” tokens, starting with Balancer. Aura has acquired 27.5% of all veBAL, and that number continues to grow. Users can vote with vlAURA or incentivize votes with vlAURA via Hidden Hand to direct the veBAL owned by Aura. Depositors of veBAL into Aura earn bb-a-USD (boosted Aave stablecoin LP on Balancer), BAL, a cut of BAL earned by Aura depositors, along with AURA emissions.
Because Balancer’s Wars are kicking off and Aura is a nascent but influential player, Vesta has an opportunity to leverage Aura’s offerings to optimize liquidity and produce long-term yields and also stickier liquidity for Vesta.
Vesta diversified its treasury into 80/20 BAL/ETH Balancer Pool Tokens (BPT) on this address for a short-term veBAL lock earlier this year in hopes of claiming an AURA airdrop. That lock has since expired, meaning Vesta can now stake the BPT elsewhere, such as Aura. Those BPT now have a value of ~$160,000.
Vesta also has a large tranche of VSTA tokens allocated to the treasury, which can be used for benefiting usage of the protocol and relevant assets.
Of note: Balancer is rapidly becoming a go-to DEX for DAOs. Just recently, DFX, JellyFi, OlympusDAO, and Redacted Cartel migrated millions of dollars worth of liquidity to the exchange and has designated it their go-to DEX. Further, Olympus recently proposed to add BAL and AURA to its strategic list of assets to accumulate for further influence over DeFi. Vesta should follow suit.
Terms
Should this proposal pass, Vesta will:
- Lock the ~$160,000 worth of the BAL/ETH BPT into Aura, minting auraBAL at a one-to-one ratio to the underlying BPT, then stake it with Aura to earn bb-A-USD, BAL, and AURA at a rate of ~110% APR as of the time of this proposal’s writing. Note: auraBAL is a liquid asset.
- As BAL and AURA is earned by the staked auraBAL position it can be used at a regular cadence to vote for VSTA-ETH, VST-3Pool, or other pools directly beneficial to the Vesta ecosystem. This will generate deeper liquidity for the relevant pairs and also generate a source of revenue for the DAO over time, which can be used operationally or to further compound Vesta’s influence over the Olympus ecosystem.
- Allocate 12,500 VSTA every two weeks to be used as voting incentives on Hidden Hand’s veBAL and vlAURA markets for the VSTA-ETH pair to respond to community complaints about the lack of liquidity for the governance token. The allocation between incentivizing veBAL or vlAURA votes will be determined by the multisig, optimizing for the most increase in liquidity and utility for VSTA. This aspect of the proposal should be regularly tracked and can be adjusted by future proposals to further optimize liquidity distribution.
Voting
This proposal will sit in request-for-comment (RFC) stage and await feedback.
If there are no meaningful objections, it should be pushed live by the DAO to Snapshot as soon as possible to ensure that liquidity conditions are improved rapidly, and so that Vesta does not miss out on any rewards for staking auraBAL.
Background Information