Hello @TokenLogic, and thanks for sharing this proposal.
In the previous discussion, as well as the ARFC that has been voted in, regarding GHO’s liquidity strategy, two pools were qualified as “Primary” - GHO/USDC/USDT & GHO/LUSD, both with the perspective of eventually being included in the Safety Module, as far as I understood it.
I’d be curious to hear the reasoning leading to the drop of the consideration of the LUSD/GHO pool. Let’s keep in mind that we are discussing the Safety Module, aka assets that should be available and retain their value at all times, especially if the markets are distressed.
As we have seen recently during the USDC depeg last March, this is not given for USDC, and thus, for a GHO/USDC/USDT pool. The direct and immutable redeemability of LUSD against ETH helps to ensure that the backing value is preserved at all times, even if the most dramatic events.
The diversification provided by such an LP exposure is quite limited, considering a sizeable share of the GHO minted currently uses USDC backing. If the goal is to diversify exposure, a LUSD/GHO seems much more sensible and defensible. Considering the development timeline (apparently already started), ensuring the governance aligns on the assets that should be included should be a priority before it moves any further.
Thanks for taking this proactive step. Indeed, this proposal suggests an implementation that differs sizeably from the overall already-agreed strategy; let’s ensure the community approves this significant revision before moving further.