AladdinDAO by the A-Team #9

January 23rd, 2024

Well the holidays are over and we are now full blast into 2024! We have a Bitcoin ETF and the price of Bitcoin has tanked…but fxUSD is on the horizon! As I type this now, the code for fxUSD has been sent off for it’s first audit! Amazing how fast things can go from idea to product in defi. I’m as excited as you guys are, and I think 2024 is going to be an incredible year for AladdinDAO and all of it’s protocols. Let’s keep the good vibes going and cruise through this Aladdin newsletter!

📈 Protocol Metrics

📆 Aladdin Month in Review by Stark

🎡 Meet A New A-Team Member: Cryptovestor!

💣Curve Wars 2.0 - pyUSD: Defi’s Lever and Fulcrum - By Cryptovestor

🚀 CLever Loans: The Nitty Gritty of How They Work! - By Kmets

🐂 Front Running Ethereum’s Charge - By Ghost08

Nothing said in this newsletter is financial advice (you’re welcome!). Please do your own research and only invest what you’re ready to lose. Good luck in your Defi adventures!

📈 Protocol Metrics

🏛️ Aladdin Month in Review

Once again community booster @stark_sharingan (Discord: SKHolmes) did the yeoman’s task of curating all the things that happened in AladdinDAO in December and January! Let’s dive in:

Here’s volume 19 of the continuing curation series:

Volume 20:

Volume 21:

🎡 Meet The Newest A-Team Member: Cryptovestor!

We asked our newest member Cryptovestor to answer a few questions about himself…he kindly obliged! Check it out:

How long have you been in crypto?

Since 2014 as a BTC maxi

What is your professional background?

COO of a private equity fund.

How did you get involved AladdinDAO?

Through Convex as a CVX maxi

What do you like best about DeFi and AladdinDAO?

Love the permissionless nature of Defi. My favorite part of Aladdin is F(x) as I feel it has the potential to change how we view and interact with defi.

What do you find most enjoyable about being in defi? What’s the most challenging aspect?

Love how you can send Frictionless payments to anyone around the world, the most challenging thing is the alphabet soup we deal with. It's not easy for the layman to understand.

Do your normie friends know you work in crypto? What are their thoughts on your occupation?

They do and they think I'm nuts. And don't understand at all what I do.

Where do you personally see AladdinDAO and Concentrator/CLever/fx in a year?

All 3 protocols should be over 500m in mc. There is no reason why this should not be achieved. Clever should have much more CVX locked. FxUSD should be the #1 decentralized stable with highest yield and paired will all major stables Including frax, pyUSD! Concentrator should have DAO level adoption as the premier autocompounding protocol.

Any projects outside of the AladdinDAO ecosystem you find interesting or noteworthy?

Convex, Prisma, Frax

What’s your favorite “touch grass” activity you like to do when you are not working on AladdinDAO?

Walking my dogs, traveling, shooting firearms. I'm a foodie and love trying new restaurants.

What’re you most looking forward to accomplishing with the A-Team over the next 6 months?

Bring more awareness to the Aladdin ecosystem. Take their products to the next level. Bring partnerships that help grow Aladdin suite of products.

💣Curve Wars 2.0 - pyUSD: DeFi’s Lever and Fulcrum - By Cryptovestor

Curve War 2.0 – pyUSD: Defi’s Lever and Fulcrum

In physics, a lever is a machine used to amplify force and a fulcrum is the point at which the lever begins to turn or is out of balance. The fulcrum when applied correctly can increase the force of the lever.

So, the question is, can PyUSD be DeFi’s lever and fulcrum? And how will this affect Aladdin Dao’s suite of products? Let’s explore further and speculate a bit.

In the past few weeks, the world of DeFi has witnessed the introduction of PyUSD, PayPal's latest stablecoin. Recent momentum suggests that PayPal is actively pursuing an aggressive strategy to attract TVL to their Curve pools and establish viable use cases for their stablecoin within the DeFi space. This is even more true now since news broke early last week that Circle, the company behind USDC is going public! Ladies and gentlemen, let the games begin!

One of the core strategies used to increase PyUSD’s liquidity is through heavy incentivization on Curve. A costly strategy but an effective and powerful one. At the time of writing, PyUSD has over 170m in TVL and the incentives just started flowing about a week ago!

Their next move is to look for partners or other stablecoins like Frax or mkUSD to co-incentivize their pools on Curve. This helps a lot since the burden is no longer solely on one side, instead, both parties help build liquidity in the pool. PyUSD is a very powerful Lever for DeFi! You see everyone wants to pair with PyUSD because liquidity attracts more liquidity, and pairing with PayPal’s stablecoin gives any protocol instant access to the outside world where customers can access funds on PayPal’s website and mobile apps, which currently serves over 420m customers worldwide. That’s a lot of new users gaining access to the DeFi space! The barbarians are at the gate!

As TVL increases on Curve for PyUSD, so does volume and swaps fees. More fees, leads to higher base APYs, higher APY’s leads to higher CRV price, which ultimately leads to bigger weekly incentives, which then leads to higher TVL on Curve, and the cycle repeats. This activity leads to a powerful and positive flywheel effect on the whole Curve ecosystem. PyUSD might just be the spark that gets the flywheel turning in the right direction again. PayPal’s strategy will likely be copied and lead other projects to incentivize on Curve to build deep liquidity. Existing projects will need to incentivize more just to keep their base APY’s in the same ranges. What you have here, ladies and gentlemen, is the beginning of a war, a new Curve War. Curve War 2.0.

It may seem cliché to even suggest that a new Curve war is upon us, especially when you have Curve death spiralooors lurking at every corner on CT. However, let’s look at the facts for a minute, last cycle, when the Curve War memes were a dime a dozen and spreading like wildfire, we had a few key players such as Frax, Luna, MIM and Alchemix. This time around, we have a much more sophisticated breed of soldier fighting in this war, ready to inject tons of liquidity into the space. Institutions and projects such as Paxos, PayPal, Frax, Ethena, Circle, Dinero, Mountain Protocol, Reserve, Origin protocol and Tron are all suitable contenders. A stablecoin war is brewing behind the scenes and it’s about to become clear to everyone soon enough.

This Curve war will ultimately benefit all of Aladdin’s core products including Clever, Concentrator and now Protocol f(x). It touches every aspect of the protocols, especially as it relates to the demand and APY’s of its products. For instance, a Curve war will increase demand for CVX and leverage on Clever. An increase in weekly incentives will increase the daily burn rate of Clever’s furnace. On Concentrators side, fees increasing on Curve will boost yields on all of its compounders and harvesters. Protocol f(x), will likely see increased demand for ETH LSDs being used to mint fxUSD. In addition, a direct pairing between fxUSD and PyUSD on Curve will create huge demand for fxUSD outside of the f(x) system causing yields to spike in the rebalance pools, increasing LSD TVL in the f(x) platform. In addition, such a curve pool will give fxUSD access to PayPal’s extensive off-chain infrastructure.

As the dynamics shift on Curve, and I'm convinced we're already witnessing the inflection point, the pace of the flywheel will intensify, spiraling with increasing momentum until it becomes an unstoppable force. I truly believe we’re in for a wild ride in the next few months, especially for the Curve ecosystem, and more specifically, for Aladdin Dao, who is on the verge of entering a golden era in this upcoming bull cycle.

🚀 CLever Loans: The Nitty Gritty of How They Work! - By Kmets

CLEVER LOANS - THE NITTY GRITTY ON HOW THEY WORK!

Have you ever been keeping an eye on the CLever Furnace for a period of time, and then all of a sudden the burn rate takes a nose dive for seemingly no good reason? It’s frustrating, weird, and in a few days or a week it goes right back to giving out an awesome burn rate! I don’t know about you, but it finally made me ask the question: WHAT THE HECK IS GOING ON HERE?!

Well in this article we are going to do a deep dive on CLever and specifically the repayment of clevCVX loans. I know, you’re probably asking yourself, “Kmets, how does repaying loans have anything to do with the burn rate in the furnace?”. Well funnily enough, if you’re a savvy defi user, they shouldn’t have anything to do with each other! Let’s find out why!

The motivation for this article came from my own personal observations of the furnace and a history of seeing that every now and again the burn rate would drop precipitously for seemingly no reason. Sharlyn, Aladdin’s brilliant founder (she’s super nice and helpful), pointed out the reasoning for this phenomenon to the community in discord a while back:

Ah ha! So this gives us our CLever Secret Fun Fact No.1: A repayment on a loan in the form of CVX always goes directly back into the Furnace.

This also gives us CLever Secret Fun Fact No. 2: Any CVX that enters the Furnace resets the 14 day distribution of all of the CVX in the Furnace to a brand new epoch.

This really got my curiosity piqued so I decided to do some digging on a recent transaction that repaid part of their loan in clevCVX and part in CVX. Let’s dive into a forensic analysis of that repayment to discover more interesting facts about CLever. (Apologies in advance to the owner of wallet address 0xcb5B7f4357c3fA26Bd43E130787A733c76eE37B7 …this is the price we pay for being part of a public blockchain).

CLever Loan Repayment Forensic Analysis

Summary

On January 18, 2024, at Block 19030689, wallet address “0xcb5B” made a repayment to resolve clevCVX debt. A portion of this repayment was made in CVX, and caused the burn rate to drop in the CLever furnace from 0.21% daily rate to 0.07%.

History of the account 0xcb5b

3,273.89 CVX were deposited to CLever on May 29, 2023.

1623.92 clevCVX were minted against the CVX collateral and immediately deposited into the Furnace.

On January 18, 2024, 0xcb5B (after 17 bribe incentive epochs) had an account balance in the furnace of:

1042.60 remaining clevCVX

594.31 claimable CVX

The account’s outstanding debt was now:

1248.84 clevCVX (collateral had earned 248.84 clevCVX)

On January 18, 2024 user then initiated the following transactions to close the position:

Call Withdraw all function to withdraw all remaining 1042.60 clevCVX from the furnace:

Call Claim function to claim all 594.31 CVX from the furnace:

Approve spending of clevCVX
Call Repay function to repay a portion of outstanding debt in the form of 1042.60 clevCVX. A 1% repayment fee goes to the Platform Fee Distributor. A debt of 206.24 clevCVX remains.

Approve spending of CVX.
Call Repay function to repay remainder of debt in the form of 206.24 CVX. A 1% repayment fee goes to the Platform Fee Distributor. 204.20 CVX was sent from the CVX locker to the Furnace. The CVX entering the furnace caused the linear streaming of outstanding rewards to reset to a new 14 day distribution.
The furnace sent an additional 248.65 CVX to the CVX Rewards vault.

Now if you’re paying attention and double checking my math (bless you), you likely came to the same realization I did: Based on what we are seeing here with flows to CVX Rewards, the furnace is now in a deficit from its original state by +204.20 CVX (from repayment inflow) - 248.65 CVX (CVX Rewards vault outflow) = -44.45 CVX! OH MY GOD! IT’S THE CLEVER FURNACE DEATH SPIRAL! WE ARE DOOMED! 😭

Welp, that couldn’t be further from the truth. 😊 CLever has an interesting aspect about the way the Furnace is designed: As we discussed earlier, whenever there is a harvest or repayment, CVX is sent to the Furnace, and it will now be distributed over the course of 14 days. But if it’s day 1, and you have a bunch of CVX that will just be sitting in the contract for up to 2 weeks doing nothing, isn’t there a more efficient use of the CVX than just sitting in a contract being unproductive? Yep. And this is where we get CLever Secret Fun Fact No.3: The Furnace only keeps a maximum of 20% of all CVX in the contract for immediate distribution. The remaining CVX is sent to Convex to be staked until it needs to be pulled back into the Furnace for distribution.

Because of this fun fact, the furnace is actually earning even MORE yield than what the original bribe incentive round produced due to additional yields from staking CVX! 🤯 DEATH SPIRAL CRISIS AVERTED! CLEVER CVX UP ONLY MODE ENGAGED!

In the case of our forensic analysis, after the user’s repayment CVX was sent to the furnace, the furnace automatically sent 452.85 CVX to Convex Finance to earn more staking rewards. Pretty cool, right?

As you can see from this forensic analysis, CLever’s Furnace is a powerful yield generating machine that has some very interesting design features to simplify its operation and to increase its efficiency. To keep all of those secret fun facts we discussed earlier in one spot here they are:

CLever Secret Fun Fact No.1: A repayment on a loan in the form of CVX always goes directly back into the Furnace.

CLever Secret Fun Fact No. 2: Any CVX that enters the Furnace resets the 14 day distribution of all of the CVX in the Furnace to a brand new epoch.

CLever Secret Fun Fact No.3: The Furnace only keeps a maximum of 20% of all CVX in the contract for immediate distribution. The remaining CVX is sent to Convex to be staked until it needs to be pulled back into the Furnace for distribution.

I have one final interesting observation about CLever. When a user repays a loan, be it in either clevCVX or CVX, we must remember that within CLever itself, the system always treats 1 clevCVX == 1 CVX. This is why a loan can be repaid in either token to settle the outstanding CVX debt. Within CLever, the protocol never ever takes into account the discount for clevCVX OUTSIDE of the system for loan repayment. What does this mean for users? It means that if you repay a portion of a loan in CVX you are losing out on the clevCVX discount you could be using to repay your loan!!! ARGH! So here is CLever Not So Secret Fun Fact No. 1: Because 1 clevCVX is always equal to 1 CVX within CLever, it is ALWAYS more advantageous to swap your CVX for clevCVX on Curve before repaying any portion of your loan.

There you have it friends! CLever is designed to make your life easier and more productive. Go forth and earn far more yield on your CVX than you can anywhere else, and feel confident that the system is working for you to survive any crypto market!

🐂 Front Running Ethereum’s Charge - By Ghost08

We’re delighted to share one of our long-time community member’s article’s they wrote recently…thanks for the contribution, GHOST08! If you happen to find yourself itching to contribute to the newsletter (or anything the A-Team produces), please let us know so we can share it for everyone else to see too. We’re all about community involvement here at AladdinDAO!

You can find the link to Ghost08’s full article here: