Expanding Beyond $218m TVL
🚀 We’re just in the premises of the protocol and as such 2022 is meant to remain a busy year for Angle!
⏩ 2022 kicked off in high gear for Angle, with the veANGLE tokenomics upgrade in early January. More than 30% of the circulating ANGLE supply have been locked into 20,924,794.33 veANGLE, for an average of 3 years and 5 months.
Since this important milestone, other incremental improvements have come to reinforce the Angle DAO and its protocol:
- Implementation of a new 4/6 public MultiSig, including 3 signers external to the team
- Bridging agEUR on Polygon through the PoS bridge, Solana through Wormhole, NEAR/Aurora through the Rainbow bridge, and Fantom, Avax, BSC, Fuse, and Harmony through multichain.org
- Ability to delegate veANGLE voting power to another address
- Improvements on the apps UI
🇪🇺 More importantly, agEUR has kept a robust peg and has become one of the most prominent Euro stablecoin while the protocol’s TVL consistently stayed above $200m.
But there’s far better that we can do and a >$1bn TVL should be a no further than a medium term objective! 😀
⚙️ Over the last few months, we have been silently preparing the next steps to further the growth of agEUR and to truly fulfill the vision of building with Angle the non-USD money layer for DeFi.
📚 TL;DR
Here, we lay down what we believe are these key essential steps:
- Launching router contract to 10x the UX when interacting with the protocol
- Developing new strategies to increase yield earned by collateral in the protocol and hence revenue for veANGLE holders
- Adding ETH as native collateral, to decentralize the collateral base of agEUR and enable leverage long ETH/EUR positions (without funding rates)
- Developing and implementing a new debt-based minting module for agEUR to increase its growth and expansion opportunities
- Allowing native minting on other networks
- Opening a flash loan module for agEUR (and future Angle Protocol stablecoins)
🛣️ Router
We have been developing a router contract to drastically improve the UX when interacting with the protocol. Essentially, it allows to combine multiple protocol actions into one transaction, opening the door for new functionalities within the apps.
The main use cases include depositing collateral as a Standard Liquidity Provider (SLP) and immediately staking the LP tokens obtained, claiming and locking ANGLE rewards in one transaction, as well as minting or opening a position from any token.
This last feature effectively allows users to mint, open a position or even to become a SLP by using any token that can be swapped into an accepted collateral of the protocol (USDC, DAI, FEI, FRAX) through UniswapV3 or 1inch. agEUR could for instance be minted from ETH or wBTC in just one transaction.
This router also removes the need for an approval transaction before using the app or the protocol, by requiring only a free and simple permit signature (as long as the tokens used support the permit() standard from EIP-2612).
The smart contract code should be released in the coming days, and the deployment and implementation in the app should follow quickly after. For more details, check this governance post.
🔆 Improved Yield Strategies
Improving strategies is a continuous process. It boils down to finding higher yield opportunities for the protocol and exploiting them, so that more interest can be generated from its capital. This is an interesting way to grow the protocol reserves and increase revenue for veANGLE holders.
For now, protocol’s reserves are being lent in Compound or Aave depending on which platform is providing the best yield. We are currently working on new strategies, and will be sharing more about this in the future. Among other things, we are exploring folding strategies (lending and borrowing in a loop to maximize rewards), single-sided Convex staking strategies and integrating with other partners (Notional, Yearn, …) to improve our yield.
🚧 Keep in mind that developing strategies is a long process, and that strategies need to be thoroughly tested before being put in production.
📈 ETH as Collateral
The way the protocol is designed allows it to accept volatile tokens to back the stablecoins issued. When enough Hedging Agents come to take on the exposure of the protocol to its underlying assets, it is able to safely back the agTokens issued.
For now, only USD-stablecoins (USDC, DAI, FEI, and FRAX) have been added as collateral in the protocol. Now that a few months have passed, it may be time for the protocol to start accepting more volatile tokens as collateral, beginning with ETH. Through it’s more volatile aspect and the long-term bullish bias of the market, it’s possible that enough HA positions could be opened to hedge the protocol, with even very small (or no) ANGLE incentives.
More importantly, this would allow to decentralize the collateral base of agEUR, while opening a new kind of financial product for DeFi through long ETH/EUR positions with no funding cost.
This would also validate Angle’s new and robust protocol design, and potentially open up new unforeseen use cases for the protocol.
More here 👉 Adding ETH as collateral governance post
🔥 New Debt-Based Minting Module
The main lever of growth for Angle remains the overall adoption and integration of agEUR. Essentially, we see two things holding agEUR’s growth back right at the moment: 1) the need for issuers to let go of their collateral to mint agEUR, and 2) the complexity of deploying the protocol as it stands now on multiple chains / layer 2s natively because of the need to attract HAs on each environment.
To remediate that, we are working on a debt-based system to mint agEUR, similar to what Maker does for DAI or Abracadabra for MIM, that we believe would be a great addition to the protocol if accepted by veANGLE holders. This would allow issuers to borrow agEUR while keeping exposure to their underlying assets. With that, agEUR (and future new agTokens) could also be expanded more easily on other networks.
🤝🏿 Obviously, this new module would be working hand in hand and in a complementary way with the current system. Both of them would have similar minting and burning rights on the agEUR contract, and other agTokens in the future.
Furthermore and as we always try to be at the forefront of stablecoin design with Angle, it would come with several new improvements over the baseline Maker/Abracadabra model like an upgraded borrower experience, capital-efficient liquidations, or better position management with debt transfer between vaults.
💰 With this new module, we would also open a new set of algorithmic market operations (AMO) for the protocol to make revenue. This module could indeed allow people to deposit riskier or lesser known collateral types, but give only to the protocol the right to borrow agEUR on top of it. The protocol would then use the borrowed agEUR in pre-defined ways/strategies, subsequently sharing the yield with the depositors. Think of it as a way to let people get a passive yield on their ANGLE tokens or to let DAOs earn interest from their idle treasury tokens thanks to agEUR they have indirectly issued.
⚡ Last, on top of this new module, we’re getting ready to implement flash loans directly from the agEUR contract, increasing again use cases for the stablecoin.
You can find more details about all this in this governance post. More info will be released in the coming weeks!
🖼️ Perspectives
These are the main milestones that we have in mind for Angle over the next 1 to 5 months. But, let’s not forget that there are other exciting things ahead for the protocol like for instance the liquid locker for ANGLE holders built by StakeDAO.
🏛️ Let’s also not forget that efforts to push for agEUR adoption and integration in and out of DeFi remain the priority. The Euro stablecoin market, in which Angle is already well positioned, is still a nascent market for which boundaries should be pushed even further. Our cross-chain partnership strategy is a first step in that regard. And we are actively working on cheap on/off ramps for agEUR and on centralized exchanges listings.
Putting all this together will grow Angle as one of the most powerful stablecoin protocols, with both a robust and expandable peg mechanism as well as multiple integrations.
💱 Angle’s mission is to build the non-USD money layer of DeFi. It has started with agEUR. Once these founding stones around agEUR will have all been laid out, it’ll be time to start exploring for other stablecoins as well, taking then advantage of what we will have learnt on the agEUR journey! So, rest assured: Angle won’t be all about the €!
🗳️ Now is the time to see what the community thinks about those upgrades, and discuss about specific implementation details or improvements together. Discord and our Governance forum are the places to share thoughts and opinions!
