Summary
The proposal seeks to add a isolated agEUR market on Venus.
References
- Website - https://www.angle.money/
- Documentation Portal - Angle Documentation Portal - Angle Docs
- Github - Angle · GitHub
- Audits - Audits - Angle Docs
- Discord - Discord
- Twitter - https://twitter.com/AngleProtocol
- agEUR BNB Address - https://bscscan.com/token/0x12f31b73d812c6bb0d735a218c086d44d5fe5f89
About Angle and agEUR
Initially launched on mainnet in November 2021, Angle is a decentralized and over-collateralized stablecoin protocol.
The protocol has launched agEUR, a Euro stablecoin, which has become the biggest decentralized Euro stablecoin. The TVL in the Angle Protocol is $30m with 19m agEUR in circulation.
agEUR is also the most traded Euro stablecoin on-chain and the most integrated across the Defi ecosystem.
There are different mechanisms (also called modules) by which agEUR can be issued all having in common that agEUR must be released on the market in an over-collateralized way.
- The Transmuter (Angle V2): agEUR can be minted against supported collateral (agEUR, and bC3M , a tokenized version by Backed of the Euro C3M ETF) at oracle value.
- The protocol also has a borrowing module where agEUR can be borrowed against different assets depending on the chain (ETH, wBTC, wstETH, LUSD, MAI) similar to Dai from Maker DAO.
- The protocol is also engaged in automatic market operations (also called direct deposit modules). It has for instance minted agEUR natively on Aave. In these cases, agEUR enter in circulation when they are borrowed in an over-collateralized way on the corresponding protocol.
agEUR is an ERC20 token backed by the assets contained in its Transmuter module and its borrowing module. agEUR is deployed on 13 blockchains including BNB Chain. The main source of liquidity on BNB Chain is a agEUR-USDT pool on Pancake swap with >$500,000 liquidity in it.
Motivation
Adding agEUR as Venus, would allow to (1) service funds, DAO, and individuals users looking to provide utility for their agEUR, (2) attract agEUR holders and all Euro seekers to Venus.
Venus would be the first money market platform to support agEUR as collateral on BNB Chain. The agEUR token is the Euro stablecoin with the most volume and this volume has increased steadily since its launch. Venus would be benefiting from this increasing demand and onboard the cohort of users coming with it but also answering a demand for a Euro stablecoin coming from existing users.
This will also benefit both the Angle and Venus by allowing users to short USD and long the EURO. This is an interesting and unoffered use case for a Euro stablecoin on any other platform.
Overall, this use case will create the opportunity to continue growing user activity and diversity on Venus and BNB Chain.
Risk Analysis
Bad Debt Risk
The main risk is accumulating bad debt on agEUR positions if loans cannot be liquidated. This risk is mitigated as agEUR has sufficient liquidity on BNB Chain with a growing agEUR/USDT pool on Pancake Swap. This will ensure on-time and smooth liquidation, it being specified that Venus will be able to monitor agEUR’s price through an oravlw provided by Binance Oracle. This risk can also be mitigated through parameters such as loan-to-value ratios.
In any case, agEUR can be bridged to BNB Chain. Hence, the liquidity risk is reduced due to presence of deep liquidity on Ethereum would allow any liquidator to effect a liquidation.
Smart Contract Risk
The token is a standard ERC20. To date, there have been no hacks or vulnerabilities on the project. Contracts are audited, including the latest audit of the Transmuter by Code4rena, and the protocol is overcollateralized with a backstop of ~$7M.5 to date i.e. if all collateral is redeemed, and all agEUR in circulation is exchanged to get back such collateral, the protocol will still have $7M.5 in reserve.
Peg Risk
agEUR kept a strong peg since its launch in November 2021. agEUR and all other stablecoins have gone though depeg events due to the USDC depeg in March 2023, and the Euler hack during the same month.
Since then, the health of the protocol and peg of agEUR have been restored. The Angle V2 (also known as the Transmuter) has been introduced following the USDC depeg to make sure the protocol resists such black swan events.
Market Risk
Considering that the reserves of both the Transmuter and the agEUR borrowing module are composed of EUROC, bC3M,USDC, DAI, FRAX, WETH, WBTC and LUSD, a systemic risk affecting these assets all at once.
The set up of the Angle borrowing module mitigates this risk thanks to specific debt ceilings per asset that controls risks of overexposure of the protocol to one specific asset.