Initial notes around StableSurge and Chainlink oracles for pools such as:
- wETH-USDC on Base (0.03% baseFee, 0.5% threshold, 5% maxFee)
- Eure-USDC on Gnosis
- Chainlink not updating frequently enough 10 bps & 24 hours at current heartbeat
- TokenCacheRate must be below 3 mins, currently 3 hours
- Backed assets in general - oracles
- No pools yet, but interesting plan with Karpatkey willing to seed
Actions:
- MikeB to deeper dive into the losses with oracle update frequencies. How do large moves in isolation leak value from the pool.
- Oracle Pools - Experimental Flag - Warning labels - Guard rail is still rate providers
- Additional pop up box like “rekt risk”
- Oracle Front running risk - a chance that an oracle update diverging from previous update can be front run and drain some value from the pool.
- This AMM is path dependent, this pool does not mean revert and in particular price paths the pool can lose value, unlike a constant function AMM.
- Past results are not indicative of future returns, regardless of the front end display of the APR represents the fees of the pool relative to TVL, but is not representative total gains due to the losses of LVR, MEV, and the above issues.
- If the pool is controlled by a third party, there is external management risk related to misconfigurations or sub-optimal settings resulting in additional losses.
- Optimizations for a fee surging hook with Oracle Pools
- Increasing spread relative to time since last oracle update.
- Linearly surging fee proportional time.
- Based on time not blocks, this accounts for if a chain or sequencer goes down. Increasing every millisecond up to a 100% if possible.
- Lining up with Chainlink expectations, linearly increasing
- Chainlink oracles update based on price divergence, and heartbeat, whicever comes first. in the case of usdc/weth on base, it’s 15bps and 20 minutes. So we would proportionally ramp up the fee to 15bps over 20 minutes, resetting whenever the oracle is reupdated.
- If no update in 20 minutes, then something is likely wrong with the oracle, and we can surge that fee even faster to protect capital. could be a different slope than the first 20 minutes
- Assets we would expand into
- Chainlink provided assets:
- wETH, USDC, USDT, wBTC, cbBTC, cbETH, Eure, maybe S&P
- Potentially backed assets with updated hook described above
- All of us to discuss with Chainlink the frequency on Gnosis for Eure, then define a surge parameter.
- Can start tighter threshold and lower fee 0.25% threshold and baseFee x% and maxFee y% (0.1% to 2%)