List Balancers BAL token on Venus Core Pool (Ethereum Mainnet)

[Oranges]

Summary:

This proposal seeks to introduce BAL (Balancers governance token) as a core pool on Ethereum mainnet. It aims to provide more Defi utility and use cases for Venus’s Ethereum deployment along with a more diverse set of collateral options to foster greater liquidity and user engagement within the Venus Protocol.

Motivation:

• Liquidity: BAL has strong liquidity on Ethereum mainnet, with ~$36m at time of writing.
• Market Acceptance: A widely distributed token, with a long history on Ethereum. It is an asset that has the potential to drive strong volumes and utility to Venus Protocol.
• Listing BAL on mainnet expands the asset offering on Venus, enhancing its position as a leading Defi protocol.

Risks:

• Volatility Risk: As with all ERC-20 tokens, the value of BAL could fluctuate sharply which could affect the stability of the Venus platform.
• Smart Contract Risks: As with any Governance token, there are inherent smart contract risks, and any exploit of the Balancer contracts themselves could have big impacts on the value of BAL. However, Balancer has undergone multiple audits and has solidified itself as a bluechip AMM without issue for a long period of time.

Benefits:

• Increased Asset Diversity: The addition of BAL provides Venus users with another asset to use as collateral or borrow, catering to different risk profiles.
• The addition of BAL brings us closer in line with our competitors, with BAL being offered as a collateral asset on multiple other lending platforms.

Background:

Balancer is a decentralized finance (DeFi) protocol built on Ethereum that enables automated portfolio management and liquidity provision. It operates as a non-custodial platform for creating and managing customizable liquidity pools, which can have multiple assets with varying weights. Unlike traditional liquidity pools, Balancer allows for unequal weightings of assets in pools (e.g., 80% ETH, 20% DAI), giving users more flexibility in portfolio allocation.

Specifications:

Contract Address: 0xba100000625a3754423978a60c9317c58a424e3d

Oracle & Price Feeds: Implementation expected with Redstone

Community Involvement:

We recommend that the Venus community support this proposal and, if agreed, request Chaos Labs to analyse and provide risk parameters for the safe integration of BAL into Venus Protocol.

We look forward to the community’s feedback and the successful adoption of BAL.

[Frayst]

I would love to see Balancers BAL token on Venus Core Pool (Ethereum Mainnet).

It will improve the global liquidity / TVL of Venus!

[Tomm]

Listing BAL on Venus core pool is a cool idea.

[Humpy007]

I, Humpy, owning considerable Balancer token holdings commit to fully utilize the Venus lending platform for my borrowing needs.

[DomVSPM]

It sounds good to me, i have also some BAL in my wallet

[chaoslabs]

Overview

Chaos Labs supports listing BAL on Venus Protocol’s Ethereum Core Pool. Below is our analysis and recommendation for initial risk parameters.

BAL

BAL is the Balancer Governance Token introduced in June 2020. Initially, BAL token incentives meant that 145K BAL were minted each week. However, in 2022, the DAO approved veBAL (representing locked BAL/WETH 80/20 BPT) as the new governance token and a new emissions schedule for BAL.

Home | Balancer

The new schedule (shown above) means that emissions are declining year over year. The current total supply is 65.9M BAL, with 30.2% of this deposited in the Balancer Vault, the smart contract that “holds and manages all tokens in each Balancer pool.” Virtually all of this (19.64M of 19.89M) is deposited in the BAL/WETH 80/20 pool; 93% of these BPTs are locked as veBAL, with an average lock time of 10.95 months.

Liquidity

Due to the setup of veBAL, virtually all of BAL’s on-chain liquidity is concentrated in the aforementioned BAL/WETH 80/20 pool. While this would normally present an elevated risk, the fact that most liquidity is locked reduces the likelihood of rapid changes in DEX liquidity.

Overall, BAL’s DEX liquidity has remained mostly stable since June, with a 600K BAL for USDC swap able to be completed for less than 10% slippage.

Over the last 90 days, its average market cap is $119M, and its average daily volume is $8.75M.

Volatility

BAL has demonstrated moderate and slightly increasing volatility relative to USD, with a 30-day daily annualized volatility of 87.47%, compared to 79.58% over the past 90 days.

Collateral Factor, Liquidation Threshold, and Liquidation Bonus

Given the asset’s moderate volatility and concentrated though locked liquidity, we recommend setting its Liquidation Bonus to 10%. Given this LB, we recommend a Liquidation Threshold of 59% and a CF of 57%.

Interest Rate Curve

We recommend aligning the IR curve with other moderately volatile assets.

Supply and Borrow Cap

Following Chaos Labs’ approach to initial supply caps, we recommend setting the supply cap at 2x the liquidity available at a price impact equal to the LB. Following this methodology, we recommend a starting supply cap of 1.5M BAL, with a borrow cap set to 50% given limited observed borrowing demand on other protocols.

Recommendation

Asset	BAL
Chain	Ethereum
Pool	Core
Collateral Factor	57.00%
Liquidation Threshold	59.00%
Liquidation Bonus	10.00%
Supply Cap	1,500,000
Borrow Cap	700,000
Kink	45%
Base	0.0
Multiplier	0.09
Jump Multiplier	3.0
Reserve Factor	20%