Angle & Paladin to utilize Liquidity-as-a-Service from Ondo Finance
On April 30, the Angle community approved a partnership with Paladin to utilize Ondo’s Liquidity-as-a-Service offering. This partnership will enable the use of $agEUR as liquidity for $PAL.
Angle will become the first project to utilize Liquidity-as-a-Service with a euro-pegged stablecoin. Angle’s approval follows an initial proposal by the Paladin community, who overwhelmingly voted to approve PGP-10 on April 30, with 14.6M (95.6%) positive votes.
What is agEUR-as-a-Service?
agEUR-as-a-Service (agEUR-aaS) is a new offering from Angle and Ondo to make it possible for projects issuing tokens to increase liquidity on decentralized exchanges.
This offering complements the already existing Liquidity-as-a-Service program from Ondo as it introduces the ability to build liquidity in a Euro-denominated stablecoin. This will better meet the needs of European protocols who now have the choice between USD or EUR stablecoins.
With agEUR-aaS, a project can deposit its token into an Ondo liquidity vault with a fixed duration. Angle will match those deposits with an equivalent amount of agEUR to form a liquidity pair. In exchange for providing agEUR, the Angle DAO will receive a fixed APR return on its provided liquidity.
How will it work?
Angle will supply 500,000 agEUR to the fixed tranche of Ondo’s liquidity vault. Paladin will match the tokens in equal value to supply €500,000 in PAL to the variable tranche. The result will be a €1M liquidity pair which will be available to trade on Uniswap v2.
In exchange for providing agEUR, the Angle DAO will receive a fixed 4% APR return on its provided liquidity, with an initial vault duration of 3 months.
How will agEUR-aaS benefit Angle & Paladin?
With agEUR-aaS, Paladin will achieve twice as much liquidity from the same amount of capital. As noted in PGP-10, agEUR-aaS is an incredibly cost-effective form of liquidity:
Currently there is 5.26% slippage for a 25,000 USDC buy, 7.93% for a 50,000 USDC buy and 12.56% for a 100,000 USDC buy…[this partnership] will add $1.1M of depth, enabling $50k trades under 4% slippage and raising trade volume by creating a third pool to arbitrage…[this program will] quell a temporary delay in liquidity depth with a significantly cheaper budget than liquidity mining.
Paladin will benefit from PAL exposure to another DEX, in this case Uniswap v2, without the need for costly liquidity mining (LM) incentives in the form of mercenary liquidity in order to grow liquidity. Despite being costly, traditional LM dilutes token holders and increases sell pressure on the token.
With agEUR-aaS, Paladin can also retain all trading fees and capture the potential upside value of the trading pair. This reduces the risk of impermanent loss (IL) and often outstrips the cost of capital.
For Angle, the vault will provide a stable APR while removing the risk of IL. Their agEUR stablecoin will gain further liquidity via another token pair, and will form part of only three pools that PAL is traded in. This partnership allows Angle to increase the utility of agEUR while earning revenue for the protocol.
Angle now sets the stage for further partnerships with other token issuers who wish to utilize agEUR-aaS to gain cost-effective liquidity in the form of agEUR. If you know of or represent a DAO that might be a good fit for agEUR-aaS, please reach out to our team.
What is Angle?
Angle is a decentralized stablecoin protocol predominately deployed on the Ethereum blockchain. It is used to issue stablecoins, called agTokens, and claims to be starting with “the first liquid Euro stablecoin on-chain”.
What is Paladin?
Paladin is a decentralized governance lending protocol deployed on the Ethereum blockchain which enables users to loan voting power in their governance token, or borrow voting power.
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