The different DOLA DEX Feds, incentivized by veToken, either veAERO on Aerodrome or veCRV (via CVX) on Curve, are functionally equivalent to a PSM, like the one from MakerDAO. They allow to mint new DOLA against USDC or other stablecoin. User simply swap it in the pool and the Fed does the heavy lifting of balancing the pool.
But contrary to a traditionnal PSM, they don’t allow to invest part of the reserve. For example, MakerDAO invest part of its USD reserve into TBill (either with special deal or with tokenized TBill), AngleDAO via its transmutter also invest in tokenized TBill, etc. This allow for around 5% yield on their reserve asset.
On the other hand, the DEX Feds benefits from the veTOKEN rewards, and thus the POL of Inverse is well rewarded.
But an ideal situation would be the best of both world: Benefiting from the veTOKEN reward (as it is the case currently) and also earning TBill rate on the part of the DEX Feds POL which is allocated in RWA USD (currently USDC).
To have an idea of the money we are leaving on the table, there is currently roughly $70M POL on Base. Half of this is allocated in USDC, so $35M. If we assume a TBill rate of 5%, that would means we could earns $1.75M a year from the yield if we were able to allocate those USDC into tokenized TBills. Quite a large amount, and which is poised to grow even bigger.
There are different ways of achieving this, depending on the DEX protocol where the Feds reside and the chain but one method could potentially work on any DEX.
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Using M0 protocol and the smart M design, we could retain the TBill rate of the LP paired with M. There would be technical challenge, the need to get approved as an earner by M0, and also it will probably not be available on every chain right away. Plus, we would need to be confident in M stablecoin liquidity before replacing USDC in it. But it should be worth looking into it as a mid-long term solution.
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Another potentially more affordable solution in the short term is the Rebasing StableSwap pool on Curve finance. Its a special pool which allow LP to keep the rebasing reward of a rebasing token, such as Mountain protocol tokenized TBill USDM. There is already an sDI - USDM pool on Curve for example.
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Another solution could be to leverage the Gyroscope finance E-CLPs automatic liquidity management pool in concert with yield bearing designed Tokenized TBills, like wUSDM or others.
Ultimately there are different method to avoid leaving money on the table from the reserve assets in our different DEX Feds. Leveraging those assets to the best use, would allow us to grow revenue and repay the bad debt sooner.
This proposal is to open a discussion with the team and the community on this subject. Given that there is of course numerous factor and trade off to consider. Happy to hear any type of feedback or insight.