@llamaxyz would like to present the following pathway forward for addressing the Bad Debt within the CRV Reserve.
Proposal
A summary of the key actions:
- Acquire CRV to repay 100% of Bad Debt, $1,877,777.89
- Gauntlet to transfer the insolvency fund to the DAO, $308,118.89
- Consolidate Assets held in v2 Collector Contract, $434,299.61
- DAO retains existing aCRV & AAVE Holding, $339,328.88, $308,118.89 respectively
Note: Values are subject to change with asset price movements within the market.
The DAO is to purchase the full amount of the bad debt within the CRV Reserve via a Bonding Curve with a 2% premium to the Chainlink Oracle price, CRV/USD.
The quantity to be purchased is equal to the variableDebtCRV position in the below wallet:
Wallet: 0x57e04786e231af3343562c062e0d058f25dace9e
Quantity: 2,651,906.53507042958070438 CRV
USD Value: 1,877,777.89 @ $0.708106/CRV
CRV: 0xD533a949740bb3306d119CC777fa900bA034cd52
CRV/USD Oracle: 0xCd627aA160A6fA45Eb793D19Ef54f5062F20f33f
Gauntlet is to redeem the stkAAVE and transfer the AAVE to the Ecosystem Reserve Contract once the funds have been withdrawn from the Safety Module.
Gauntlet Wallet: 0x7667095Caa12b79fCa489ff6E2198Ca01fDAe057
Quantity stkAAVE: 4,923.6
Value stkAAVE: $308,118.89 @ 62.5800
Ecosystem Reserve: 0x25f2226b597e8f9514b3f68f00f494cf4f286491
The following tokens in the v2 Collector Contract are to be Redeemed and exchanged for USDC via a series of Bonding Curves:
Implementation
To repay the bad debt:
pool.repay(crv, total bad debt, variableInterest, Address)
CRV:0xD533a949740bb3306d119CC777fa900bA034cd52
Total Bad Debt: 2,651,906.53507042958070438
Address: 0x57e04786e231af3343562c062e0d058f25dace9e
Discussion
Llama believes the CRV position held by the DAO can be considered a strategic asset with the intention of it being converted to veCRV and potentially used to either generate revenues, bootstrap GHO on Curve or direct CRV rewards towards new aToken gauges. At this point in time, we believe the DAO can acquire CRV with USDC, and avoid using the existing CRV holding.
The above proposal enables the DAO to continue to maintain its current CRV position. The DAO is one of the largest Liquidity Providers of CRV on the v2 Ethereum deployment and this liquidity when transferred to v3 will continue to generate revenue as CRV is one of the most sought after governance tokens listed on the protocol.
In addition, @Llamaxyz seeks to Redeem the aTokens shown in the image and then convert these holdings to USDC by deploying a series of bonding curves. The amount of tokens, price, value of each holding and the premium to the Chainlink Oracle applied on the Bonding Curve is shown above. This is intended to consolidate the assets held within the v2 Collector Contract and also partially offset the USDC outflows.